Polymarket is locked in one other controversy over the interpretation of UMA, a decentralized oracle that makes use of token holder voting to resolve prediction markets.
UMA – a protocol which is a separate entity from Polymarket – isn’t any stranger to controversy, having dominated earlier than with interpretations that even Polymarket would not agree with.
This time, it’s about Ukrainian President Volodymyr Zelenskyy’s apparel: Polymarket bettors had been requested if the sometimes informal chief would seem in a swimsuit earlier than July.
On June 25, Zelenskyy wore an outfit described by the BBC, New York Submit, and others as a swimsuit. But the market is ready to resolve “No,” sparking outrage from these set to lose their bets on the $200 million market.
“UMA’s voting incentives encourage individuals to vote with the perceived majority to keep away from penalties, not based mostly on factual correctness,” RememberAmalek mentioned. “This creates circumstances ripe for manipulation.”
RememberAmalek is a distinguished Polymarket bettor who earned $300,000 predicting Zohran Mamdani’s upset victory in New York’s mayoral main by figuring out important flaws in polling information and betting in opposition to standard knowledge. Between his a number of accounts, he is earned effectively over $1 million in wins.
In UMA’s dispute decision system, voters stake tokens to take part in deciding market outcomes. Those that vote in opposition to the ultimate consensus face penalties often known as “slashing,” the place a portion of their staked tokens is confiscated or diminished.
This financial penalty construction motivates voters to align their selections with the anticipated majority opinion, even when it contradicts their real interpretation of factual correctness.
“One particular person holding hundreds of thousands of tokens and deciding multi-million greenback outcomes will not be decentralization,” he mentioned, referring to UMA’s largest whales that maintain a controlling share of tokens and generally slash those who vote in opposition to them.
On-chain information parsed by IntotheBlock reveals that 95% of UMA tokens are held by massive holders. For the sake of comparability, simply over half of ETH tokens are held by massive holders.
“It undermines the whole level of utilizing prediction markets to seek out fact,” the dealer continued.
Reflecting on his personal methods, RememberAmalek admitted overtly to betting on UMA resolutions somewhat than the underlying info of markets.
“Polymarket and UMA want a direct rethink of their decision mechanism,” he mentioned. “Each main dispute damages consumer belief, notably smaller bettors who really feel scammed and go away.”
And what is the resolution in his eyes? Maybe sarcastically, centralization.
However executed professionally and transparently. By Polymarket itself, not some outdoors protocol.
As a result of proper now, “this is not decentralized,” he concludes.
Learn extra: Polymarket Embroiled in $160M Controversy Over Whether or not Zelenskyy Wore a Go well with at NATO
