The unraveling argument doesn't rely on the efficient market hypothesis per se, but I think it rests on similar assumptions. Namely, that everyone is hyper rational and can strategize many moves ahead. In reality, people aren't that super rational, so the market won't unravel completely. But people are somewhat rational, so the dynamic will still be there.

I think it makes sense to not want to participate in the larger platforms. There, you are more likely to be betting against real insiders. (Not to mention, some oracle shenanigans in Polymarket). For a relatively small and unknown platform, you're more likely to be betting against people just having fun.