tl;dr
Crypto-based prediction marketplace Polymarket has issued an apology on its Discord server due to alleged manipulation of market results by UMA whales. The apology comes after users raised concerns about the manipulation of betting market outcomes. Despite admitting the issue and promising to work w...
Crypto-based prediction marketplace Polymarket has issued an apology on its Discord server due to alleged manipulation of market results by UMA whales. The apology comes after users raised concerns about the manipulation of betting market outcomes. Despite admitting the issue and promising to work with the UMA team to prevent a recurrence, Polymarket stated it cannot offer refunds as it does not consider it a market failure. The company has faced accusations of ongoing manipulation by UMA whales, with claims that fraudulent markets are increasing in frequency. Polymarket's monthly volume has declined, and it previously faced accusations of wash trading on its platform.
UMA is Polymarket’s oracle system whereby the results of betting markets are determined by recourse to external sources of data, and by staking UMA tokens behind a particular resolution. For example, if there were a market that allowed users to predict whether the sun would rise tomorrow, UMA holders would be rewarded for backing “yes” and risk losing their tokens if they chose "no."
Polymarket did not immediately respond to a request for comment from Decrypt. The market asked whether Ukraine would agree to a mineral deal with the U.S. before April. And despite the fact that no such deal has been agreed, UMA participants have resolved in the affirmative. They resolved as “yes” even after this outcome was disputed on two separate occasions, with Polymarket admitting in its Discord post that the “market resolved against the expectations of our users and our clarification.” Even though it has admitted that such an outcome “is not a part of the future we want to build,” Polymarket has also said that, because the issue “wasn’t a market failure,” it can’t offer compensation or refunds.
However, some users and observers have claimed that manipulation of market outcomes by UMA whales has been ongoing for at least several weeks. In a March 11 thread on X, Norway-based equity analyst Folke Hermansen flagged several markets which he alleged had been manipulated by UMA whales. Polymarket’s monthly volume declined from $2.5 billion on Nov. 1 to $687.9 million on March 1, according to data from Dune. While the run-up to the U.S. presidential election was a busy time for Polymarket, it faced accusations in late October that wash trading was taking place on its platform.