Polymarket Predictive Market Sparks Controversy: UMA Protocol Whales Manipulate Outcomes, Allowing Bets on Losses to Yield Profits

On-Chain Prediction Market Polymarket Faces Controversy

Recently, Polymarket, an on-chain prediction market, has been embroiled in controversy, with users accusing the platform of allowing the outcomes of betting events to be manipulated by a small number of whales, violating official rules, and even resulting in the absurd phenomenon where “you can win even after losing a bet.” The core issue points to design flaws in the third-party protocol UMA that Polymarket relies on, sparking strong community concerns regarding fairness and trust.

Core Controversy: Discrepancy Between Market Outcomes and Reality

On the X platform, on-chain observer @Web3Marmot revealed that a prediction event on Polymarket regarding “whether Ukraine will provide rare earth metals to Trump before April” was judged as “Yes,” even though there has been no official confirmation from either the US or Ukraine. This outcome completely contradicts the event’s rule, which states that “the result will be based on official information.”

Even more controversially, two smaller markets with similar conditions were judged as “No.” The observer suggested that the larger markets attract attention from manipulators, and the results were not based on facts, but rather on whether they were manipulated by “UMA whales.”

More Examples Reveal Systemic Issues

In addition to the aforementioned case, @Web3Marmot also discovered other suspected instances of exploitation, including:

• Whether Fort Knox gold is missing: Resulted in “No” before an audit was completed, with a market size of around 3.5 million USD.
• Whether the US government will shut down: Resulted in “Yes,” but did not reflect the facts, with a market size of 53 million USD.

He pointed out that these markets showed results clearly inconsistent with reality, involving amounts of hundreds of millions of dollars, leading to questions about whether the platform’s fairness is being systematically compromised.

Polymarket and UMA: The Critical Dependency from Prediction to Judgment

To understand the root of this controversy, it is necessary to clarify the mechanism of cooperation between Polymarket and UMA. UMA (Universal Market Access), as a decentralized protocol, provides a service called “Optimistic Oracle” to decide the final outcome of events:

Polymarket does not determine the prediction results for each market itself, but submits the events to UMA for “crowd voting judgment.” However, UMA uses a token-based voting mechanism, where voters must stake tokens, and if the result deviates from the majority, they lose their tokens, while those who vote correctly are rewarded.

The issue lies in the fact that this system, which is supposed to maintain fairness, may be manipulated when voting power is concentrated in the hands of a few “whales”: “The result no longer reflects reality, but rather the distribution of power.”

UMA’s Decision-Making Mechanism Exposes the Flaw: A Single Person Using Three Accounts Controls 25% of the Vote

@Web3Marmot conducted an in-depth analysis and discovered this fatal flaw, criticizing the so-called “crowd voting” as being monopolized by a few whales:

In this market, the same person used three different addresses to cast more than 5 million UMA tokens, accounting for 25% of the total vote, successfully influencing the judgment results and creating an unfair “player and referee” situation.

He revealed that, in addition to the UMA voting mechanism problem, submitting a dispute to the officials requires a non-refundable deposit of $750, which prevents ordinary users from challenging unjust results, leading to an imbalance where “whales suppress the truth.”

Official Response: It’s Not a Bug, It’s a “Design Feature”

In response to this controversy, Polymarket’s official account replied on X: “POLYMARKET IS NOT A POLL!!”, emphasizing that this is a design feature, not a system flaw. However, this statement was seen as a shirking of responsibility, further fueling user dissatisfaction.

@Web3Marmot also called out to Polymarket, warning that if neither the platform nor its founder Shayne Coplan implements reforms, they will join forces with the community to boycott it. He urged the public to share related posts to raise awareness of the platform’s issues.

Initially, Polymarket’s vision was to build a transparent crowd prediction platform, but it has now fallen into market manipulation and a crisis of trust. If the platform continues to ignore the concentration of decision-making power and the imbalance in incentives, this “prediction market revolution” may gradually collapse amid a loss of trust.

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