Bitcoin, Ethereum, Solana, XRP, Hyperliquid, BNB and Dogecoin are among the cryptocurrencies affected by Polymarket’s recent decision to change how it settles certain timed prediction markets, replacing a single final price with a time-weighted average price, or TWAP.
The change covers five-minute, 15-minute, and one-hour up-and-down contracts and comes as cryptocurrency becomes a much larger part of prediction market activity. Digital currency volume across all-or-nothing prediction exchanges reportedly increased significantly, fueled in part by the popularity of short-term contracts that let users speculate on price movements over minutes or hours.
Polymarket is allocating $1 million in liquidity across the affected markets as the new settlement methodology is introduced.
Growing Crypto Markets Bring New Integrity Concerns
Rapid settlement has helped make crypto prediction markets attractive, but it has also raised questions about whether short-term contracts can be influenced by sophisticated traders immediately before expiration.
Research from Stanford University and Singapore Management University recently highlighted those concerns after examining roughly 16,000 five-minute Bitcoin contracts on Polymarket. They identified repeated increases in buying and selling activity on Binance shortly before contracts expired and estimated that approximately $8.2 million moved from retail traders to professional, technology-backed trading platforms during the two months studied.
Five-minute contracts appeared particularly vulnerable, while the researchers found less evidence of similar activity in 15-minute and 60-minute markets. The academics pointed to TWAP as one possible way to make such strategies less effective.
That difference could be significant. A trader attempting to influence a contract in the final seconds of a five-minute window would have less ability to change the settlement outcome if the price is determined using data collected throughout the period.
Betting on a Fairer Crypto Market
Polymarket’s move is therefore more than a technical update. Growing crypto volumes give the operator a stronger reason to reassure retail traders that increasingly popular short-term contracts cannot be easily manipulated by participants with more sophisticated trading tools.
The effectiveness of the new settlement approach will ultimately depend on whether it can reduce the impact of last-second price movements without making the products less attractive to traders. If TWAP delivers that balance, Polymarket’s approach could provide a template for other prediction market operators dealing with the same combination of rapid crypto trading, growing retail participation and concerns over market integrity.
