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

Author: Chloe, ChainCatcher

Following the March 23 official announcement update to its “Market Integrity Rules,” Polymarket’s rules are now applied across both 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 thin air; it is the product of a series of controversies and public-opinion pressure, as well as Polymarket’s compliance “self-rescue” before U.S. mainstream financial regulators delivered a regulatory shock.

However, the new rules affect not only true insider players—do they pose an even more direct threat to the interests of the large “airdrop farming” user base? Or is the impact more directly aimed at those professional arbitrageurs who genuinely provide liquidity?

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

Revisit the public-opinion and regulatory pressure Polymarket has faced over the past several months. In early January 2026, an anonymous user spent $32,537 on Polymarket to bet that “Maduro will be out of office before January 31.” After Trump announced early at 4:21 a.m. on Truth Social that Maduro had been arrested, the user immediately received as much as $436k in returns, with an ROI of more than 13 times.

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

Just like that, around the same period, suspicious trades appeared on Polymarket relating to “the timing of the U.S. taking military action against Iran,” with some accounts building positions precisely on the eve of U.S. military strikes, netting profits of hundreds of thousands of dollars.

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

” However, in reality, in March 2026, Senators Adam Schiff and John Curtis jointly proposed 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 coordinate with regulators to identify “manipulation or price distortion risk.”

The dragnet has already formed, and Polymarket’s policy upgrade is a proactive response to this dragnet.

Deconstructing the new rules: three prohibitions 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 by persons who have influence over the outcome.

On the market manipulation front, the rules further explicitly ban activities such as spoofing (false quotes), wash trading (volume-washing trades), fictitious transaction (fictitious trades), and others. In response to these prohibitions, ChainCatcher, in an interview with ChainCatcher, said the boundary between “wash trading” and normal trading lies in whether it creates real value and whether it bears trading costs. The volume-wash “buy on one side, sell on the other” involves the same group of people trading back and forth purely for data; while normal arbitrage or market-making involves placing limit orders at different price levels and bearing the risk of the position—each trade is executed against real market users and can withstand scrutiny.

In terms of the enforcement architecture, Polymarket uses a “multi-layer monitoring” design. On the DeFi platform side, all trades are recorded on the Polygon blockchain, and anyone can publicly look them up. The platform works with world-class monitoring technical specialist institutions for on-chain anomaly detection; once suspicious behavior is found, possible sanctions 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 National Futures Association (NFA). The latter can directly open investigations and sanction violators. Sanction measures include suspending eligibility, terminating accounts, imposing currency fines, or referring cases to regulatory authorities.

The利益 of air-drop farmers and the dilemma of the related studios?

Polymarket’s move is a blow to “insider players,” but for the air-drop farming user group and related studios, it may spark something different. In the face of the new rules, the reactions of major market players are intriguing. With Polymarket’s historical trading volume already exceeding $200 million, ChainCatcher, in an interview with ChainCatcher, said the new rules were within expectations—indeed, something they had been waiting for. They believe this is not a crackdown but a sign that the market is maturing. As early as when the platform began charging fees, the professional teams had already anticipated that the platform would eventually charge the entire market and strengthen regulation.

For ordinary volume-washing airdrop users, what they previously relied on—“wash trading” behavior that manufactures massive on-chain records and executes one market’s double-account matching—now hits directly the barrel of the new rules. Even some players have evolved into matrices controlling 100 wallets, or hedging between Polymarket and Kalshi, but with the monitoring system upgraded, the risk of such behavior increases dramatically.

ChainCatcher believes that truly high-quality strategies should not be “air-drop farming,” but rather genuine arbitrage. Arbitrage itself is the process of finding price deviations and correcting market inefficiencies—this is healthy behavior that prediction markets need. As gray-area operations are squeezed out, the market will become cleaner, and professional arbitrageurs’ profits may actually be higher.

The liquidity contradiction: volume-washing users—parasites or infrastructure?

In addition, behind this round of regulations is a contradiction Polymarket cannot avoid: Polymarket’s liquidity is not formed naturally. According to on-chain data, 80% of users on the platform place a single bet 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 an extremely small number of large traders and liquidity providers.

What is 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 narrow bid-ask spreads, strengthen market carrying capacity, and allow 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 needed massive amounts of real trading and depth data to prove the effectiveness of its market to the CFTC (Commodity Futures Trading Commission)—which is crucial for obtaining further regulatory approvals.

If the new rules are too aggressive and scare off this group of air-drop farmers, liquidity depletion in the short term is almost inevitable, especially in long-tail niche markets, where these farmers are often the only source of counterparty flow.

In response, ChainCatcher says the platform should face up to the contribution of users who provide real liquidity. For example, within a multi-account system, if each day they contribute millions of dollars in trading volume, and all of it is made up of maker limit orders, that is exactly what the platform’s mechanism encourages. Especially in events with low volatility and poor liquidity, these resting orders can add depth to the order book so that ordinary users can actually get filled. This behavior, in essence, uses capital and time to earn referral 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 strategy.

From acquiring the licensed exchange QCX to signing an agreement with the NFA, everything shows that prediction markets are moving closer to traditional financial regulation. In such a highly transparent and regulated pathway, the survival space for traditional “low-quality volume-washing” will only keep getting narrower. ChainCatcher believes that the new rules are actually favorable for professional teams. In the future, they will take three countermeasures: first, increase liquidity provision and strive for more maker rebates; second, actively discuss deeper market-making plans with the platform; third, continuously optimize strategies to improve returns under compliant premises.

Overall, for studios that view Polymarket as a core profit source, now is a key turning point where strategic focus shifts from “quantity” to “quality.” Rather than manipulating 100 wallets to do low-quality wash-matching volume and taking the risk of being precisely identified and collectively banned by the monitoring system, it’s better to give up the multi-wallet matrix and instead operate a small number of high-quality accounts. By conducting deep trades through real market research, or focusing on liquidity provision within the platform’s rules, you can not only effectively avoid ban risk, but also more likely receive a more favorable allocation in the final airdrop weighting calculation, because you contribute genuine value.