Key Takeaways:

• The top 1% of Polymarket traders capture around 84% of gains, while casual users often take losses.
• The “wisdom of the crowd” is real, but it is largely funded by everyday users who lose money.
• Compensating losses could improve trust and encourage participation from everyday users, not just professionals.

A growing number of analysts and researchers are questioning how prediction markets like Polymarket distribute value and who really benefits.

As the platform prepares for a potential token airdrop, some experts argue that the current system disproportionately rewards professional traders, while everyday users bear most of the losses.

A recent study by Andrey Sergeenkov found that the top 1% of Polymarket users capture 84% of all trading profits, often at the expense of casual participants. While prediction markets are praised for their accuracy and “wisdom of the crowd,” critics say that intelligence comes at a cost, and that cost is paid by less experienced users.

Now, a new proposal is gaining attention: Instead of rewarding the winners, why not reward the losers?

Why most users lose and why it matters

Polymarket markets itself as a tool for real-time probabilities, helping users and even journalists understand the likelihood of events. But behind this utility lies a simple reality: For every winner, there must be a loser.

In practice, experienced traders with better strategies and more information tend to dominate. Meanwhile, everyday users, often newer to crypto or prediction markets, end up on the losing side of trades.

This dynamic creates an uneven system where:

• A small group captures most of the profits.
• Casual users fund the market’s accuracy through losses.
• Beginners face a steep learning curve with real financial consequences.

For newcomers, this is especially important. What looks like a fun way to “bet on outcomes” can quickly turn into consistent losses without a clear understanding of risks.

Learn More: Crypto Trading and Web3 Essentials: From On-Chain Tools to NFT Finance

Airdrop problem and why the current model may fail

Rumors revealed that Polymarket has hinted at a potential future token airdrop, which often incentivizes “farming,” where users boost activity to qualify for rewards.

On prediction markets, this could mean placing low-conviction bets or creating multiple accounts, not to express real opinions, but to maximize token allocation. The result is a key risk: skewed predictions driven by incentives rather than belief.

There are early signs of this dynamic. Research from Sergeenkov suggests that around 25% of Polymarket’s trading volume may already involve artificial or manipulative behavior.

There’s also a familiar post-airdrop pattern:

• Early users receive tokens.
• Many sell quickly.
• Prices drop.

Industry data shows that up to 88% of airdropped tokens lose value within three months. Together, these factors raise concerns for everyday users. Not only could market accuracy decline, but any future token distribution may disproportionately benefit sophisticated “farmers” or insiders, echoing broader concerns about uneven playing fields in prediction markets.

Related: Research Shows Most People Lose Money on Polymarket

A different approach: Rewarding losses instead

Experts like Sergeenkov are now proposing a radically different solution: Base the airdrop on losses, not activity or profits.

Under this model:

• Users who lost money would receive tokens.
• Rewards would be proportional to their losses.
• Farming and manipulation would be nearly impossible.

The idea is simple: The people who make prediction markets valuable are often those who lose money. Compensating them could create a fairer system and encourage long-term participation.

For beginners and everyday users, this approach could be a game-changer. Instead of feeling penalized for learning, users would be recognized for contributing to the market.

It could also improve trust. Users who feel treated fairly are more likely to stay, rather than exit after losses.