Cryptocurrency derivatives platform Polymarket is altering its settlement procedure for short-dated contracts. The move reflects concerns regarding potential manipulation identified by academic researchers. The company is transitioning from a single-price snapshot mechanism to a time-weighted average price (TWAP) approach. This adjustment will apply across five-, fifteen- and four-hour markets.
Polymarket has revealed that research conducted jointly by Stanford University and Singapore Management University uncovered patterns of activity suggestive of manipulation by hundreds of accounts. The investigation reportedly identified 821 accounts which allegedly generated $8.2 million in settlement windows they deemed likely influenced. This represents a substantial sum within the platform’s operations.
To mitigate this vulnerability, Polymarket is implementing a revised resolution process. Five-minute markets will now utilise a 30-second average to determine outcomes. Similarly, 15-minute and four-hour markets will employ a 60-second average for settlement calculations. Data delivery will be facilitated through Chainlink Data Streams, a network designed to deliver data reliably.
The platform intends to add liquidity rewards of $1 million across all affected markets throughout August. Researchers described the weakness as “structural.” The exact number of accounts involved in manipulation remains unconfirmed, allegedly identified at around hundreds. This change follows research into market behaviour within Polymarket’s short-dated contract offerings.
Written by Oliver Grant
Markets Desk
