#Polymarket mechanism loophole. 💥

As the most eye-catching "prediction market" leading protocol in the Ethereum ecosystem in this round of bull market, it has swept the world during the US 🇺🇸 election. The predicted transaction volume of the presidential election alone is close to 1B US dollars. However, now someone has tampered with the final prediction results and made profits by manipulating the oracle, which makes the community question the fairness and playability.

What happened? 🔽

Prediction event: Will Ukraine 🇺🇦 reach a rare earth trade agreement with Trump before April.

Real answer: No Final beneficiary: Yes

Why did such a reversal happen? 👇

#Polymarket relies on @UMAprotocol's Optimistic Oracle (OO) to resolve disputes over market results.

A UMA tycoon (bet in this market, but according to the reality, he is about to lose the bet (i.e. the market result is not in his favor).

UMA's Optimistic Oracle mechanism allows users to propose market results (propose), and if no one objects (dispute), the result will be accepted. If there is a dispute, it will enter UMA's Data Verification Mechanism (DVM), and the final result will be decided by UMA token holders voting.

At the last moment of market settlement, this UMA tycoon used the huge number of UMA tokens he held to "hijack" the oracle's results through voting, forcibly reversing the predicted results and profiting from it.

UMA's DVM mechanism relies on the votes of token holders, and the voting weight is proportional to the amount of coins held. The voting influence of this tycoon is enough to overwhelm other participants.

The incident exposed the#UMAoracle and #Polymarket Potential loopholes in the governance mechanism, especially when the tokens are unevenly distributed, large holders can use voting rights to manipulate the results.

What is Polymarket's response ❓

The official later admitted that this was a "mistake" because the results were obviously inconsistent with reality, however, Polymarket said that this governance attack was "part of the rules of the game." Their position is that the design of the UMA oracle allows token holders to decide the results through voting, even if the results are inconsistent with reality. This is the operating logic of the decentralized system, so Polymarket refused to modify the results.

📢 Note:#UMAmarket value $180 million

The US presidential election, the prediction market transaction volume is close to $1B.