A prediction on Polymarket regarding the prospects of Israeli military action in Syria in 2024 was criticized, especially considering that allegations of manipulation were filed against the oracle provider, UMA.
The prediction market, Polymarket, has seen almost $1.55 billion in trading volume in the last 30 days.
Yet one market has brought controversy, with a resolution criteria stating that it should resolve to “Yes” if, at any time between Sept. 12, 2024, and Dec. 31, 2024, Israel carries out a military action against Syria or any Syrian territory.
The resolution requires credible confirmation from someone like Syria, Israel, the U.N., or a consensus of reputable reporting. Importantly, under the rules of the market, it is not noted as Syrian territory in the Golan Heights.
Despite the establishment of an agreement where both Israel and Syria have their buffer zones, Israel continues to violate Syrian air and land, taking control of some villages that are beyond the buffer zone. Credible news agencies have confirmed these developments. That said, despite these confirmations, UMA voters have turned down attempts to settle the market as “Yes” on two occasions.
According to critics, there is an intentional delay of resolution by a category of UMA token holders, commonly referred to as “UMA whales,” in order to extract economic benefit. Based on detailed research by crypto commentators, and among them OxNimrod.eth of eOracle, several proposals were offered to resolve the market in “Yes,” but all went down by two governance votes, 97.3% of the votes cast against resolution. This has led to accusations of dominant players exploiting their position to adopt no-risk trading options.
However, co-founder Hart Lambur disagreed, saying voters of UMA are rule followers for Polymarket and thus have a significant interest in the long-term sustainability of the system. Lambur further argued that UMA token holders lack incentives to manipulate the system since their actions would lead to a decrease in the token’s price and damage its protocol’s reputation. He added a further view on this matter by stating that rules from the makers govern governance at UMA.
The controversy brings to light the flaws that exist in decentralized betting platforms. Fair, transparent, and accurate resolutions of markets through oracles are of key importance to user trust. This was seen in a similar challenge of market clarity and resolution at another prediction market, Kalshi. Manipulation allegations and eventual resolution of high-stakes markets stress the need for governance, transparency, and clear criteria.
