Controversy around a resolution regarding Israeli action in Syria has erupted after a prediction market on the decentralized betting platform Polymarket predicted it would happen on December 19, 2024. It is a dispute about a market that predicts the odds that Israel will take military action against Syria or Syria’s territory from September 12, 2024, to December 31, 2024.
While potentially credible reports of military activity on Syrian territory have delayed resolution of the market and call into question the fairness and transparency of decentralized betting platforms.
With traders putting over $1.55 billion in trading volume in the preceding 30 days on the Polymarket platform, users are able to bet on various global events based on the actions of reputable oracles, with the resolution being determined by the conduct of reputable oracles.
This time around the market would settle at “Yes” if credible evidence emerged that Israel conducted any kind of military action in Syria during the allowed period. Confirmation must be provided by recognized authorities such as Syria, Israel or the U.N. or by a general opinion of a credible news outlet, said the NEFA Foundation in an email message. But a massive caveat ruled that any such actions involving a disputed region, the Golan Heights, between the two countries.
Polymarket’s Governance Under Fire in Syria Bet
While we’ve seen report after credible news report that Israel has breached Syrian Airspace and Territory, including seizure of villages beyond agreed buffer zones, attempts to resolve the market in favour of “Yes” have been repeatedly shot down. The problem is in how UMA, a decentralized governance system used to settle disputes on Polymarket, is not built to always settle disputes. Aligning with market manipulation theories, the voting of ‘UMA whales’ voting down to proposals that could resolve the market in favor of ‘Yes’ has put off proposals by market participants to quite the market.
Critics say UMA whales are holding out for money. According to research by crypto commentators including OxNimrod.eth of eOracle, two proposals were overwhelmingly rejected, receiving 97.3% of votes against the resolution. It has resulted in a few claims that powerful players within the UMA token ecosystem are using their influence to extract financial gains while doing essentially no risk.
In response, Polymarket co-founder Hart Lambur said UMA token holders were committed to long-term sustainability of the system through the UMA governance process. Lambur pointed out that there is no motivation for UMA voters to abuse the market since doing so could harm the value of UMA tokens and tarnish the protocol’s reputation. According to him, UMA’s governor rules regulate decision-making for the sake of the platform’s integrity.
In this ongoing controversy, there are greater problems with how decentralized betting platforms like Polymarket are governed. The accuracy, transparency, and fairness of how this process resolves disputes is an important truth at the core of markets that rely on oracles to resolve disputes. This is not unlike what we have seen in other prediction markets, like Kalshi, where allegations of manipulation have brought questions of governance and the clarity of market criteria into question.
Polymarkets handling of Syria Israel prediction debate exposes how much robust governance mechanisms and transparent decision-making processes are essential in decentralized platforms. With the industry growing, it will become increasingly important for these markets to ensure fair and unbiased resolutions for the long-term success and credibility of such markets.
