Polymarket rules change: How should airdrop enthusiasts respond?

Author: Chloe, ChainCatcher

After Polymarket’s official announcement update of the “Market Integrity Rules” on March 23, the rules are applied simultaneously to its DeFi platform and the U.S. exchange under CFTC oversight. The new rules clearly prohibit three categories of insider trading behavior and strengthen the framework for cracking down on market manipulation tactics. This policy adjustment did not arise out of thin air—it is the product of a chain of controversies and mounting public pressure, and also Polymarket’s compliance-driven self-rescue before U.S. mainstream financial regulators struck.

However, the new rules affect not only real insider players—do they pose a more direct threat to the interests of the large population of “airdrop farmers,” or to those professional arbitrageurs who truly provide liquidity?

The pressure behind the rule upgrade: from the Venezuela coup to the Iran war

Look back at the public opinion and regulatory pressure Polymarket has endured over the past few months. In early January 2026, an anonymous user spent $32,537 on Polymarket to bet that “Maduro will step down before January 31.” After Trump announced that Maduro was arrested at 4:21 a.m. on Truth Social, the user immediately received returns as high as $436,000, with a return on investment of over 13x.

Investigations found that the account was only created in December 2025, that all bet targets precisely pointed to Venezuela’s political developments, and that the betting timing occurred just a few hours before the event broke. In this regard, Dennis Kelleher, co-founder of Better Markets, pointed out that the transaction had all the characteristics of insider trading: a newly created account, a large amount of capital, accurate prediction of timing, and everything taking place in a market that was unregulated and lacking transparency.

Not surprisingly, around the same period, suspicious trades appeared on Polymarket related to the “timing of the U.S. taking military action against Iran.” Some accounts allegedly built positions precisely ahead of the U.S. military strike, earning hundreds of thousands of dollars in profit.

值得注意的是，Polymarket CEO Shayne Coplan once said something thought-provoking in a CBS News interview: “It’s a good thing for the market that insiders have an advantage.

” However, the reality is that in March 2026, Senators Adam Schiff and John Curtis jointly introduced bipartisan legislation to ban prediction-market trading contracts that are “similar to sports or casino games.” In the same month, the Commodity Futures Trading Commission (CFTC) issued guidance requiring prediction market platforms to take specific measures to prevent insider trading, and encouraged exchanges, when designing event contracts, to proactively consult regulators to identify the risk of “manipulation or price distortion.”

The net has already been cast. Polymarket’s policy upgrade is an active response to this dragnet.

Rule deconstruction: three bans and a multi-layer monitoring framework

On March 23, 2026, Polymarket officially released updated Market Integrity Rules, clearly drawing three red lines: first, trading based on stolen confidential information; second, trading based on illegal sources of information; and third, trading by those whose actions can influence the outcome.

On the front of market manipulation, the rules further explicitly prohibit behaviors such as spoofing (false quoting), wash trading (volume-splitting trades), and fictitious transaction (fabricated trades). Regarding these prohibitions, in an interview with ChainCatcher, ChainCatcher’s team said that the boundary between “wash trading” and normal trading lies in whether real value is generated and whether trading costs are borne. In “wash-and-rebate” volume-matching, the same group uses one hand to buy and the other hand to sell purely for data; while normal arbitrage or market making places limit orders at different prices and bears the risk of holding positions. Each trade is executed against real market users and can withstand scrutiny.

In terms of execution architecture, Polymarket adopts a “multi-layer monitoring” design. On the DeFi platform side, all transactions are recorded on the Polygon blockchain, and anyone can publicly review them. The platform works with world-class monitoring technology professional institutions to perform on-chain anomaly detection; if suspicious behavior is found, sanctions may include banning wallet addresses and referring users to law enforcement agencies.

On the Polymarket US side (a CFTC-regulated exchange), monitoring is divided into three layers: external monitoring technology partners, a real-time monitoring desk, and a regulatory services agreement signed with the U.S. National Futures Association (NFA). The latter can directly initiate investigations and sanction violators, with sanction tools including suspending eligibility, terminating accounts, monetary penalties, or referring cases to regulatory authorities.

The interests of “airdrop farmers” and the predicament of related studios?

Polymarket’s move is a major blow to “insider players,” but it may spark different outcomes for the “airdrop farmer” user base and related studios. Faced with the new rules, the reactions of major market players are intriguing. At present, in Polymarket’s historical trading volume, ChainCatcher’s interview with ChainCatcher’s team shows it has already exceeded $200 million. They say the introduction of the new rules was not only expected, but even long-awaited. They believe this is not a crackdown, but a sign that the market is maturing. As early as when the platform began charging fees, professional teams had already anticipated that it would eventually charge the entire market and strengthen regulation.

For typical volume-spoofing airdrop users, in the past, they relied on manufacturing massive on-chain records and conducting “wash trades” by setting up double accounts to match orders in a single market—yet they have run headfirst into the new rules. Some players have even evolved into a matrix controlling 100 wallets, or hedged between Polymarket and Kalshi, but upgrades to the monitoring system significantly increased the risk of such behavior.

Truly high-quality strategies should not be “airdrop farming,” but genuine arbitrage. Arbitrage is the process of identifying price discrepancies and fixing inefficiencies in the market—this is the healthy behavior prediction markets need. As gray operations are squeezed out, the market will become cleaner, and professional arbitrageurs’ profits may actually be higher.

The liquidity contradiction: are volume-spoofing users parasites, or foundational infrastructure?

Additionally, behind this round of regulation lies a contradiction Polymarket cannot avoid: Polymarket’s liquidity is not formed naturally. According to on-chain data, 80% of the platform’s users place bets with a single-bet amount of less than $500, and in the past month the average single-bet amount was only around $100. Therefore, what truly supports market depth is a very small number of large traders and liquidity providers.

One issue worth exploring is whether, among airdrop farmers, those who adopt “legal strategies” (such as providing two-way liquidity and cross-platform arbitrage) objectively play the role of informal market makers.

They reduce the bid-ask spread and enhance the market’s ability to absorb trades, allowing ordinary users to build positions at more reasonable prices. On the other hand, from a business logic perspective, after Polymarket returns to the U.S. market, it urgently needs massive real trading and deep market data to prove its market’s effectiveness to the CFTC (Commodity Futures Trading Commission). This is crucial for obtaining further regulatory approvals.

If the new rules are too aggressive and scare away these “airdrop farmer” users, a short-term liquidity freeze is almost inevitable, especially in long-tail niche markets where these farmers are often the only source of counterparty demand.

In response, the platform should recognize the contributions of users who provide real liquidity. For example, under a multi-account system, if every day they contribute millions of dollars in trading volume and all of it is maker limit orders, that is exactly what the platform’s mechanism encourages. Particularly in events with low volatility and poor liquidity, these posted orders give depth to the order book, enabling ordinary users to get filled. This behavior is essentially exchanging capital and time for rebates, while serving the market.

With regulatory compliance “mainstreamed,” do related studios also need a strategic pivot?

It can be said that Polymarket’s compliance process is not a short-term market fluctuation, but a signal that the platform’s strategy is turning.

From acquiring the licensed exchange QCX to signing an agreement with the NFA, all of this shows that prediction markets are moving toward traditional financial regulation. In such a highly transparent and regulated path, there will only be less and less room for “low-quality volume spoofing” to survive. ChainCatcher’s team believes that the new rules are actually beneficial for professional teams. In the future, they will take three countermeasures: first, increase liquidity provision to secure more maker rebates; second, actively discuss deeper market-making plans with the platform; and third, continuously optimize strategies to improve returns under compliance constraints.

Overall, for studios that view Polymarket as their core profit source, this is a critical turning point for shifting the strategic focus from “volume” to “quality.” Rather than manipulating 100 wallets to execute low-quality wash-and-spoof trading volume and accepting the risk of being precisely identified by the monitoring system and collectively banned, it’s better to give up the multi-wallet matrix and instead operate a smaller number of high-quality accounts. By conducting deep trades through real market research, or focusing on liquidity provision within platform rules, you can not only effectively avoid ban risks, but also, in the final airdrop weighting calculation, more likely earn a more favorable token airdrop allocation by contributing real value.