Polymarket rules are changing. How should the airdrop community respond?

Author: Chloe, ChainCatcher

The Market Integrity Rules in Polymarket’s official announcement update on March 23 are also applied simultaneously to its DeFi platform and the U.S. exchange under CFTC oversight. The new rules clearly prohibit three categories of insider trading and strengthen the framework for combating market manipulation. This policy shift did not arise out of nowhere; it is the product of a series of controversies and public-pressure, and also Polymarket’s compliance-driven self-rescue before U.S. mainstream financial regulators came crashing in.

However, the new rules affect not only real insider players—do they threaten the interests of the massive “loot-hunting” user base more directly? Or do they pose a more direct threat to those professional arbitrageurs who truly provide liquidity?

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

Review the public and regulatory pressure Polymarket has faced over the past few months. In early January 2026, an anonymous user spent $32,537 on Polymarket, betting that “Maduro will step down by January 31.” After Trump announced that Maduro had been arrested on Truth Social at 4:21 a.m., the user immediately received returns as high as $436,000, with a return on investment of more than 13x.

Investigations found that the account was only created in December 2025, and all the betting targets precisely pointed to Venezuela’s political situation, with the bet timing placed just a few hours before the event erupted. Better Markets co-founder Dennis Kelleher noted that the trade had all the hallmarks of insider trading: a newly created account, large capital, precise forecasting of the timing, and everything occurring in an unregulated market lacking transparency.

Coincidentally, around the same period, suspicious trades also appeared on Polymarket targeting the “timing of the U.S. taking military action against Iran.” Some accounts opened positions right ahead of the U.S. military strike, netting profits of several hundred thousand dollars.

It’s worth noting that Polymarket CEO Shayne Coplan had said something thought-provoking in an interview with CBS News: “It’s a good thing for insiders to have an advantage in the market.

” However, the reality is that in March 2026, Senator Adam Schiff and John Curtis jointly introduced bipartisan legislation to ban futures-style trading contracts on prediction markets 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 adopt specific measures to prevent insider trading, and encouraged exchanges, when designing event contracts, to proactively consult regulators to identify “manipulation or price distortion risks.”

The regulatory hunt has already formed, and Polymarket’s policy upgrade is a proactive response to that hunt.

Dissecting the new rules: three bans and a multi-layer monitoring framework

On March 23, 2026, Polymarket officially released updated Market Integrity Rules, clearly setting out three red lines: first, trades based on stolen confidential information; second, trades based on illegal sources of information; third, trades by people who have influence over outcomes.

On the market manipulation front, the rules also explicitly ban behaviors such as spoofing (false bids), wash trading (volume-spoofing trades), fictitious transaction (fictitious trades), and so on. Regarding these bans, in an interview with ChainCatcher, ChainXishe said that the boundary between “wash trading” and normal trading lies in whether it creates real value and whether it bears trading costs. Volume-flipping is the same group passing orders from left hand to right hand purely for data; while normal arbitrage or market making places limit orders at different price levels and bears the risk of holding positions. Each trade is executed against real market users and can withstand scrutiny.

In terms of the execution architecture, Polymarket uses a “multi-tier monitoring” design. On the DeFi platform side, all trades are recorded on the Polygon blockchain, and anyone can publicly verify them. The platform partners with world-class monitoring technology professional institutions to conduct on-chain anomaly detection. If suspicious activity is discovered, possible enforcement actions include banning wallet addresses and referring users to law-enforcement authorities.

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 National Futures Association (NFA). The latter can directly launch investigations and punish violators. Enforcement measures include suspending eligibility, terminating accounts, monetary penalties, or referral to regulatory authorities.

What about the interests of “loot-hunting” users and the dilemmas of related studios?

Polymarket’s move is a heavy blow to “insider players,” but it may spark different reactions among the loot-hunting user groups and related studios. Faced with the new rules, the reaction of major market players is thought-provoking. ChainXishe, interviewed by ChainCatcher, said that given Polymarket’s historical trading volume has already exceeded $200 million, the introduction of the new rules was expected—indeed, 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 supervision.

For ordinary volume-spoofing airdrop users, what they used to rely on—manufacturing massive on-chain records and “wash sales” by double-account order matching in a single market—now collides directly with the new rules. Even some players evolved matrices that control 100 wallets, or hedged between Polymarket and Kalshi, but with the upgrade of the monitoring system, the risk of such behavior has multiplied.

ChainXishe believes that truly high-quality strategies should not be “loot-hunting,” but real arbitrage. Arbitrage is, by nature, the process of discovering price discrepancies and fixing market inefficiencies—that 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 paradox: are volume-spoofing users parasites, or core infrastructure?

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

Worth exploring is whether, among the airdrop “farmers,” the group that adopts “legitimate strategies” (such as providing two-sided liquidity and cross-platform arbitrage) objectively plays the role of informal market makers.

They narrowed the bid-ask spread and strengthened 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 returned to the U.S. market, it urgently needs massive amounts of real trades and depth data to prove the effectiveness of its market to the CFTC (Commodity Futures Trading Commission). This is crucial for obtaining further regulatory approvals.

If the new rules are overly aggressive and scare away these loot-hunting users, then in the short term liquidity depletion is almost inevitable—especially in long-tail niche markets, where these farmers are often the only source of counterparty demand.

In response, ChainXishe said the platform should recognize the contributions of users who provide real liquidity. For example, in a multi-account system: if each day they contribute millions of dollars in trading volume, and all of it consists of maker limit orders, that is exactly what the platform mechanism encourages. Especially in events with low volatility and poor liquidity, these orders can bring depth to the order book, enabling ordinary users to execute trades. This behavior is essentially using capital and time to earn rebates while also serving the market.

Under regulatory compliance, do related studios also need a strategic shift?

It can be said that Polymarket’s compliance process is not a temporary market fluctuation, but a signal of the platform’s strategic shift.

From acquiring the licensed exchange QCX to signing an agreement with the NFA, everything indicates that prediction markets are moving toward traditional financial regulatory oversight. In this highly transparent and regulated path, the survival space for “low-quality volume spoofing” will only keep getting narrower. ChainXishe believes that the new rules are actually favorable for professional teams. In the future, they will take three countermeasures: first, increase liquidity provision to secure more maker rebates; second, actively explore deeper market-making plans with the platforms; third, continuously optimize strategies to improve returns under compliant conditions.

Overall, for studios that view Polymarket as their core profit source, this is a critical turning point where the strategy focus shifts from “quantity” to “quality.” Rather than controlling 100 wallets to do low-quality order-matching and volume spoofing—bearing the risk of being precisely identified by the monitoring system and collectively banned—it’s better to give up the multi-wallet matrix and manage a smaller number of high-quality accounts. Through deep trading based on real market research, or by focusing on liquidity provision within platform compliance requirements, you can not only effectively avoid the risk of bans, but also more likely receive a more favorable token airdrop allocation in the final airdrop weighting calculation by contributing real value.