Understanding UMA and Dispute Resolution on Polymarket
Tools & Resources
As you may know, when there is a dispute over how a market should be resolved on Polymarket, the resolution decision is delegated to UMA.
While most markets are uncontested, and even when contested, the resolution is often straightforward, there are rare cases where it's not immediately clear how UMA will vote. Because Polymarket keeps the market open until the UMA outcome is known, this can create both potential opportunities and risks—essentially turning it into a bet on how UMA will decide, for this reasons it important to understand how UMA votes.
In this post, we will try to provide an overview of the informal guidelines and practices that UMA voters typically follow when voting on market resolutions based on our experience.
What is UMA
According to their website, UMA is an optimistic oracle and dispute arbitration system that allows for various types of data to be brought on-chain, enabling resolutions based on real-world data.
Whenever a dispute arises on Polymarket, UMA token holders vote on how the market should be resolved. Their voting power depends on the number of UMA tokens they hold and commit to the specific vote.
UMA token holders receive rewards when they vote accurately but are penalized if they vote incorrectly.
There are two key things to remember from this high level introducton that are important for topic of this article:
although there are typically around 200 individual voters per dispute, the power of each vote is weighted by the tokens committed, meaning that while UMA is decentralized, the influence isn’t evenly spread—large token holders ("whales") can significantly sway the outcome.
You can view an overview of UMA voting concentration here.
Since rewards are only given for correct votes, voters are incentivized to align their vote with what they believe others will choose.
Resolution Philosphy
UMA does not have an official philosophy or specific voting guidelines, but based on our understanding we two main thing to keep in mind:
UMA is not a court, emphasize reaching a consensus outcome rather than acting as a strict arbitrator.
UMA tries to resolve the market based on the spirit of the market not the nuanced interpretation based on small details, this done according to words of the UMA founders to not hurt normie user, you can see here a tweet of one the founder
Practical Resolution Principles and Precedents
So, what does this philosophy look like in practice? Here, we outline some principles UMA has followed consistently in major disputes over the past few months:
The title reflects the spirit of the market and it is more important than the rule: How users perceive the market often takes precedence over strict rules.
UMA is not a court: Attempts to “lawyer” one’s way to a desired outcome through technical interpretations of market rules it is unlikely to resonate with UMA voters.
The public understanding of the fact are more important of the nuanced interpretation of the rules set: UMA’s approach is closer to using the Headline Template method, emphasizing broad consensus over small details.
Example: In the market, Will RFK Jr. drop out before September?, the market resolved to "Yes" based on public consensus, despite primary sources stating otherwise.
Consensus of credible reporting trumps the primary sources: If reputable news outlets reports a news contradicting the primary resolution source of the market (e.g., a government statement), the market is likely to resolve accroding consensus of credible reporting w
Example: In the Venezuela Presidential Election Winner market, the result favored Edmundo González based on credible reporting, even though the official source indicated otherwise.
Credible reporting is considered as reputable English-language news outlets, such as NYT, CNN, WSJ, BBC, etc. Non-English sources may be considered, but non-Western outlets are viewed as very weak sorce of information.
Example: In the market Israel military action against Iraq before November?, the outcome relied on articles from NYT, WSJ, Jpost, and Guardian, despite contradictory reports from local outlets.
Polymarket clarifications are treated as binding market rules: UMA will vote in alignment with Polymarket clarifications and has never overturned a clarification from Polymarket.
UMA rarely reverses its initial decision in a multi-round vote:
Example: In the market Will Israel invade Lebanon before September? , UMA consistently voted against the "Yes" outcome in both rounds, first ruling “too early” and later “No.”
Additional Considerations
Polymarket is UMA's largest client, and UMA’s founders have limited incentives to go against its interests
Polymarket whales have a low influence on UMA decisions, as UMA founders retain significant voting power
While Polymarket can override UMA, this has never happen, in oly one case has only: Was Barron Trump involved in DJT? polymarket refunded both sides of the bet