Written by: Azuma, Odaily
Last night, Polymarket, a prediction market that went viral during the US election, suffered the most severe oracle manipulation attack since its inception. This led to an incorrect result determination in a prediction pool with a betting scale of over $7 million, causing users who bet on the correct result to suffer heavy losses, while those who bet on the wrong result walked away with all the funds in the pool.
The prediction pool in question was "Will Ukraine reach a rare earth trade agreement with Trump before April?" In the real world, the US and Ukraine have not yet reached an agreement on this trade, so the prediction pool's result should have been "No". However, as shown in the image, the pool's determination unexpectedly shifted to "Yes" before settlement, ultimately creating this upside-down situation.
Why did this happen? The answer lies in Polymarket's determination mechanism. Polymarket relies on the UMA oracle to determine event results, with the following process:
Result Reporting: After an event occurs, anyone can report the result to UMA.
Dispute Window: After a report is submitted, there is a dispute period where anyone can challenge the report. If no one disputes, the report result will be accepted; if there is a dispute, UMA's dispute resolution mechanism will decide the final result.
Dispute Resolution: UMA token holders must vote to determine the correct result, with UMA incentivizing honest behavior and penalizing malicious actions.
According to Polymarket's process records, the prediction pool ultimately reached the third step, meaning someone challenged the original report's result, requiring a UMA vote to determine the final outcome.
According to UMA's final voting result, 54.6% of votes disregarded the facts and chose "Yes", forcibly pushing the prediction pool to determine the final result as "Yes".
According to Reddit user @iamtheone, another option "It's too early to conclude" was initially leading in the UMA voting, but in the final stage, a mysterious force invested millions of UMA tokens in the "Yes" option, forcibly changing the voting result.
Meanwhile, UMA's price had inexplicably surged 24% on March 22nd before gradually falling, possibly indicating that this mysterious force had been preparing its plan for days.
The Reddit user added that this is not the first oracle manipulation event on Polymarket, with previous small-scale market manipulations (such as declaring Edmundo González as Venezuela's president or claiming Trump audited Knox Fort), but this is the largest in terms of involved amount, with the prediction pool's total bet exceeding $7 million.
The key reason for this incident is that the UMA voting mechanism, which Polymarket relies on for final decisions, only sets a 0.05% penalty for incorrect voting, making the cost of malicious behavior extremely low. With the potential massive profits from distorting facts, fraudsters have ample motivation to implement oracle manipulation.
More shockingly, Polymarket's official personnel announced this morning in Discord that they are aware of the incident but cannot refund users.
We have learned about the abnormal situation in the Ukrainian rare earth agreement prediction market. The settlement results contradict user expectations and our previous clarifications. As this incident does not constitute a system failure, we cannot process refunds. The current situation is unprecedented. We have been in round-the-clock emergency meetings with the UMA team to ensure such events do not recur. This is not the future we want to build - we will establish more comprehensive system monitoring mechanisms, develop more explicit rule frameworks, and optimize more timely clarification processes. Specific measures will be gradually announced after a comprehensive assessment.
It's not hard to imagine that Polymarket's response was quickly met with community criticism, with the original prediction pool's comment section now accumulating 5,554 comments, with many users attacking Polymarket's mechanism and response.
As one of the most impressive projects in the entire cryptocurrency market last year, Polymarket clearly does not lack funds to fully compensate, and such a response will inevitably damage its market reputation and community sentiment. Considering the current heated community emotions, whether there is room for subsequent mitigation, Odaily will continue to track in real-time.
