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

Author: Chloe, ChainCatcher

Polymarket’s updated “Market Integrity Rules,” announced officially on March 23, now apply in parallel to both its DeFi platform and the U.S. exchanges under CFTC supervision. The new rules clearly prohibit three types of insider trading behavior and strengthen the framework for cracking down on market manipulation tactics. This policy adjustment did not appear out of thin air—it is the product of a series of controversies and public-opinion pressure, and also Polymarket’s compliance “self-rescue” action before major impacts from U.S. mainstream financial regulators.

However, what the new rules affect is not only real insider players—does it threaten the interests of the large group of “airdrop farmers” more directly? Or is it those professional arbitrageurs who truly provide liquidity?

The history of pressure behind the rule upgrades: from a Venezuelan coup to the Iran war

Look back at the public-opinion and regulatory pressure Polymarket has been facing over the past few months. In early January 2026, an anonymous user spent $32,537 on Polymarket and placed a bet that “Maduro will be removed from office by January 31.” After Trump announced at 4:21 a.m. on Truth Social that Maduro had been arrested, the user immediately received returns of up to $436,000, with an ROI of more than 13x.

Investigations found that the account was only created in December 2025, and all the bet targets precisely pointed to the Venezuelan political situation, with the timing of the wagers occurring just a few hours before the event broke out. In this regard, Dennis Kelleher, co-founder of Better Markets, pointed out that this transaction has all the hallmarks of insider trading: a newly created account, large funds, precise prediction of timing, and everything happening in an unregulated market lacking transparency.

Not to be outdone, around nearly the same period, suspicious trades appeared on Polymarket regarding “the timing of the U.S. taking military action against Iran.” Some accounts built positions precisely on the eve of U.S. military strike operations, earning profits of several hundred thousand dollars.

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

” However, in reality, in March 2026, Senator Adam Schiff and John Curtis jointly introduced bipartisan legislation to ban 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 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 regulatory dragnet has already formed, and Polymarket’s policy upgrade is an active response to that dragnet.

New rules dissected: 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, trades based on stolen confidential information; second, trades based on illegal sources of information; third, trades made by those who have influence over the outcome.

On the market manipulation front, the rules also explicitly prohibit behaviors such as spoofing (fake bids), wash trading (volume-pumping trades), and fictitious transaction (fake trades). Regarding these prohibitions, ChainCatcher said in an interview it conducted with ChainCatcher that the boundary between “wash trading” and normal trading lies in whether real value is created and whether trading costs are borne. Volume-pumping “wash” is the same group of people passing volume from left hand to right hand purely for the data; while normal arbitrage or market making is placing limit orders at different price levels and bearing the risk of holding positions. In every trade, the counterparty is a real market user, and the activity can withstand scrutiny.

In terms of the enforcement architecture, Polymarket adopts a “multi-layer monitoring” design. On the DeFi platform side, all trades are recorded on the Polygon chain, and anyone can publicly verify them. The platform works with world-class monitoring technology professional institutions to conduct on-chain anomaly detection; once suspicious behavior is detected, the sanctions that can be taken 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 U.S. National Futures Association (NFA). The latter can directly launch investigations and sanction violators, with sanction measures including suspension of status, termination of accounts, monetary penalties, or referral to regulatory authorities.

Do the interests of “airdrop farmers” matter, and what dilemmas do related studios face?

Polymarket’s move is a heavy blow to “insider players,” but different sparks may appear for the “airdrop farmer” user group and related studios. Faced with the new rules, the reaction of big market players is intriguing. According to ChainCatcher, whose historical trading volume on Polymarket has already surpassed $200 million, in an interview with ChainCatcher, the issuance of the new rules was both within expectations and even something they had been anticipating for a long time. 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-pumping airdrop users, the past approach relied on manufacturing massive on-chain records and engaging in “wash trading” by matching two accounts against each other in a single market, only to run straight into the new rules. Even some players have evolved into a matrix that controls 100 wallets, or hedge between Polymarket and Kalshi, but with the upgraded monitoring system, the risk of such behavior multiplies.

ChainCatcher believes that truly high-quality strategies should not be “airdrop farming,” but real arbitrage. Arbitrage itself is the process of discovering price discrepancies and fixing market inefficiencies—this is the healthy behavior prediction markets need. As gray operations are squeezed out, the market will become cleaner, and the returns of professional arbitrageurs may actually be higher.

The contradiction of liquidity: are volume-pumping users parasites, or core infrastructure?

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

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

They narrow buy-sell spreads and enhance the market’s ability to absorb trades, allowing general 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 volumes of real trades and depth data to demonstrate the effectiveness of its market to the CFTC (Commodity Futures Trading Commission). This is crucial to obtaining further regulatory approvals.

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

In response, ChainCatcher said that the platform should face up to the contributions of users who provide real liquidity. For example, in a multi-account system: if users contribute millions of dollars in transaction volume every day, and all of it comes as maker limit orders, that is exactly what the platform mechanism encourages. Especially in events with low volatility and poor liquidity, these resting orders can add depth to the order book, enabling general users to actually get filled. This behavior is essentially using capital and time to obtain rebates, while serving the market.

Under regulatory compliance, 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 is shifting its strategy.

From the acquisition of the licensed exchange QCX to signing an agreement with the NFA, everything indicates that prediction markets are moving closer to traditional financial regulation. In such a highly transparent and regulated path, the survival space for traditional “low-quality volume-pumping” will only become narrower. ChainCatcher believes 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 more in-depth market-making plans with the platform; 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 where the focus of strategy must shift from “quantity” to “quality.” Rather than manipulating 100 wallets to carry out low-quality wash-volume trades and taking the risk of being precisely identified by monitoring systems and collectively banned, it’s better to give up the multi-wallet matrix and instead operate a small number of high-quality accounts. Through deep trading backed by real market research, or by focusing on liquidity provision within the platform’s rules, you can not only effectively avoid the risk of being banned, but also—more likely in the final airdrop weighting calculation—obtain a more favorable allocation of token airdrops by contributing real value.