New Polymarket restrictions: how the platform is fighting against rapid arbitrage

The Polymarket prediction platform has encountered an unexpected problem: one of the system traders exploited a pricing flaw to make significant profits. Over the past month, a trader with the identifier 0x8dxd completed over 7,300 transactions, achieving an impressive success rate of 99% and earning more than $515,000.

How the temporary arbitrage scheme worked

The trader’s secret to success was a simple but effective scheme. Polymarket updates quotes with a delay compared to major cryptocurrency exchanges. The investor placed orders within milliseconds after prices were set on external markets, almost guaranteed to profit from price movements. This was not traditional forecasting — it was a pure exploitation of a technical flaw in the system.

Platform response: dynamic fees and profit redistribution

In response to this vulnerability, Polymarket implemented radical changes to its fee structure. The platform introduced a dynamic fee system for takers (those who execute existing orders), which can reach up to 3.15% for transactions conducted within a 15-minute window on the crypto market.

The key feature of this mechanism is that all collected fees are directly transferred to liquidity providers. Thus, the platform not only penalizes arbitrageurs but also effectively redirects their potential profits to participants who provide market depth and stability. This creates an economic incentive for honest trading participation and makes short-term arbitrage economically unviable.

This approach allows Polymarket to maintain the integrity of its market while protecting other users from exploiting price delays.