The decentralized prediction market Polymarket has recently been embroiled in controversy due to a bet involving Trump and Ukraine mineral trade. The market has accumulated a trading volume of over 7 million USD, but the final settlement results, dominated by whale voting, have sparked intense community concerns about market manipulation and governance risks.
Whale voting impacts market settlement, manipulation risks emerge
Polymarket relies on the UMA protocol's blockchain oracle to obtain external data for settling market outcomes and verifying real events. However, during the market settlement on March 25, the final outcome was determined by a minority of large whales, leading some users to believe that the settlement method was severely biased.
Despite many suspecting deliberate manipulation, user Tenadome suggested in a March 26 post on X (Twitter) that it was more likely due to negligence by oracle voters.
"There are no 'tycoons' manipulating the oracle," Tenadome wrote, "The same group of UMA whales, mostly affiliated with the UMA team and not actually involved in Polymarket trades, vote in every dispute."
He further pointed out that these voters tend to ignore clarifying information to avoid having their rewards cut, leading to settlement results that do not match market expectations.
Polymarket responds: No refunds, enhanced monitoring to be implemented
In response to user queries, Polymarket officially stated that no refunds will be provided.
"We are aware of the controversy surrounding the Ukrainian rare earth market, and the settlement method differs from user expectations and our clarifications," Polymarket moderator Tanner said, "But since this is not a market mechanism failure, we cannot offer refunds."
However, to prevent similar incidents from occurring again, Polymarket has promised to establish a new monitoring system to reduce governance loopholes and ensure more transparent and fair settlement processes in the future.
Prediction market boom: US elections drive a 565% increase
Despite the controversy affecting Polymarket's reputation, the entire prediction market industry continues to grow rapidly. Data shows that in the third quarter of 2024, driven by the US presidential election, prediction market trading volume surged by 565%, from 463.3 million USD in the second quarter to 3.1 billion USD.
Currently, Polymarket holds over 99% of the market share in the decentralized prediction market, firmly maintaining its industry-leading position. However, whether this controversy will affect its long-term development remains to be seen.
