Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
Last night, the prediction market Polymarket, which gained immense popularity during the U.S. elections, suffered the most severe oracle manipulation attack since its inception, resulting in a prediction pool with over $7 million in bets giving an incorrect outcome. Ultimately, users who bet on the correct outcome suffered heavy losses, while those who bet on the incorrect outcome took home all the funds in the prize pool.
The involved prediction pool was “Will Ukraine reach a rare earth trading agreement with Trump before April?”. In reality, the U.S. and Ukraine have not reached an agreement on this trade, so the outcome of this prediction pool should have been “no.” However, as shown in the image below, the outcome of this prediction pool unexpectedly turned to “yes” before settlement, leading to this reversal of truth.
Why did this happen? The answer lies in Polymarket's determination mechanism. Polymarket relies on the oracle UMA to determine the outcome of events, and its determination process is as follows:
Result Reporting: After the event occurs, anyone can report the outcome to UMA.
Dispute Window: After the report is submitted, there will be a dispute period during which anyone who believes the report is incorrect can raise a dispute. If no one disputes, the report will be accepted; if there is a dispute, UMA's dispute resolution mechanism will decide the final outcome.
Dispute Resolution: UMA token holders must vote to determine the correct outcome, and UMA will incentivize honest behavior while punishing malicious actions.
According to Polymarket's process records, the prediction pool ultimately reached the third step, meaning someone disputed the original report's outcome, necessitating a vote through UMA to determine the final result.
According to UMA's final voting results, 54.6% of the votes disregarded the facts and chose “yes,” forcibly pushing the prediction pool to determine the final outcome as “yes.”
According to Reddit user @iamtheone's records, another option “It’s too early to conclude” initially led the UMA voting, but in the final stages, a mysterious force poured millions of UMA into the “yes” option, forcibly changing the voting result.
Meanwhile, the price of UMA also inexplicably surged 24% on March 22, then gradually fell back, which may indicate that this mysterious force had already prepared its plan days in advance.
The Reddit user added that this is not the first oracle manipulation incident on Polymarket; the platform has previously experienced several small-scale market manipulations (such as determining the Venezuelan president as Edmundo González, claiming Trump audited Fort Knox), but this time involved the largest amount, with total bets in the prediction pool exceeding $7 million.
The key reason for this incident is that the UMA voting mechanism, which Polymarket relies on to make final decisions, only imposes a 0.05% penalty for incorrect votes, making the cost of malicious actions extremely low. In the face of potential profits from reversing the facts, scammers have ample motivation to implement oracle manipulation.
Even more shocking is that Polymarket's official personnel announced on Discord this morning that they are aware of the unexpected situation but cannot refund users.
We are aware of the abnormal situation in the Ukraine rare earth agreement prediction market. The settlement result of this market contradicts user expectations and our previous clarifications. Since this incident does not constitute a system failure, we cannot process refunds. The current situation is unprecedented. We have initiated round-the-clock emergency meetings with the UMA team to ensure that such incidents do not occur again. This is not the future we want to build — we will establish a more comprehensive system monitoring mechanism, formulate clearer rules, and optimize a more timely clarification process. Specific measures will be announced gradually after a comprehensive assessment.
It is not hard to imagine that Polymarket's response quickly faced backlash from the community, with the comment section below the original prediction pool accumulating 5,554 comments, with many users criticizing Polymarket's mechanism and response.
As one of the most impressive projects in the entire cryptocurrency market last year, Polymarket clearly does not lack the funds to make full compensation, and such a response is bound to damage its market reputation and community sentiment. Considering the current heated community emotions, whether the subsequent situation can have room for maneuver will be closely monitored by Odaily Planet Daily.
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