Traders bet more than $59 million on whether Polymarket would launch its US platform before the end of the year. But a question meant to produce a simple yes-or-no answer has exposed a deeper problem: prediction markets built to resolve uncertainty may struggle with it themselves.
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Polymarket, which uses cryptocurrencies to process bets, outsources disputes to holders of the UMA token. That has proven controversial, with traders burned in the past over the resolution of questions such as whether Ukraine’s President Volodymyr Zelenskiy had worn a suit.
Critics say the dispute mechanism can favor large token holders and influential voices. Anyone can post in the UMA chatroom where votes are debated, for example, and UMA’s operator Risk Labs warns in a disclaimer that “some commenters may attempt to influence vote outcomes for their own profit.” Risk Labs did not immediately respond to a request for comment.
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In the contract tied to whether Polymarket would launch in the US this year, traders were bound by terms laid out when it first opened to bets in late July, a day after the platform announced it had acquired a US regulated venue. The rules stated that the market would resolve in favor of the launch having occurred if a real-money trade was publicly placed on the regulated platform by the end of 2025.
A clear answer to that question remained elusive on Friday. A website for Polymarket’s US venue stated that the company is “working hard to get the US platform ready for launch.” Even so, UMA holders delivered their own verdict, with more than 90% of tokens allocated to the vote backing a “yes” resolution. All the while, anonymous complaints about the process were posted to Polymarket’s website and UMA’s chatroom.
The back-and-forth attracted even more betting, with overall volume rising roughly 90% over the past day as traders spotted an opportunity to buy in before a final decision arrived. One Polymarket user had started loading up on “no” shares on Thursday, seemingly convinced the vote would resolve in their favor. By the time it concluded, they owned the most “no” shares in the market and faced a loss of more than $23,000.
When disputed markets are particularly contentious, Polymarket can choose to step in and provide a clarification of the rules. In this instance, it kept quiet.
https://archive.is/7KrnB
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