Researchers at Stanford University have found that Polymarket’s five-minute Bitcoin prediction markets create financial incentives to manipulate spot prices around contract settlement, according to a new study.
The research identifies a structural vulnerability in ultra-short-duration prediction markets, where traders can influence the underlying Bitcoin price to benefit their positions as the settlement window approaches. The compressed timeframe makes manipulation economically viable for relatively small trades.
The Stanford researchers propose extending settlement windows as a potential fix, arguing that longer time horizons would dilute the incentive to manipulate spot prices. The findings have implications for the broader prediction market ecosystem, which has seen explosive growth in crypto-adjacent contracts.
This article was originally reported by Cointelegraph. Rewritten and published by The Coolest Info.
