Announcing our product for Polymarket
After a successful POC for Gitcoin GR8 grants, our team went back to the drawing board to come up with our next iteration to not only audit off-chain information but further connect it with on-chain data.
Presenting audits for the information markets platform, Polymarket. 👇
PowerLoom Protocol for Polymarket
PowerLoom Protocol snapshots on-chain Polymarket data to give you actionable insights on markets.
Polymarket is a decentralized information markets platform that lets people trade real-money markets on the outcomes of the most-highly debated current events, and follow the odds to garner accurate insights about the future. Users buy or sell Outcome Shares, which can be redeemed for $1 if the outcome is resolved as correct, and become worthless if it’s incorrect. Owners of outcome shares are never locked in and can sell their position at any time. The goal is, by harnessing the power of free markets, Polymarket can aggregate collective knowledge and provide the general public with an unbiased source of truth in regards to the likelihood of certain significant events happening in the future.
PowerLoom Protocol formalizes a paradigm of traceable audits of off-chain, as well as on-chain data that are backed on to IPFS and Filecoin in an open InterPlanetary Linked Data (IPLD) graph schema.
The said schema allows us to have a replay of the snapshots via
ipfs dag of such data taken at regular intervals by a PowerLoom operated battery of watcher services. These watchers in the future will be operated by concerned parties that have a stake in the transparent running and resolution of prediction markets. The reason this is important is so that there’s a recordable audit trail that allows users to have trust in the underlying protocol.
The recording of the snapshot itself is committed as a proof on the Layer2 Matic chain to anchor a record of chronology.
These watchers are hooked on to event streams emitted by the MarketMaker contracts corresponding to each market. This captures the following information as well as automatically generates
diff ‘s between snapshots to provide actionable insights into
- changes that occur with the positions and outcomes as defined by the Gnosis Conditional Tokens Framework
- buying and selling activity of shares, liquidating positions in the market
- changes in share prices
- addition or removal from the liquidity pool that supports the market.
- Total trade volume arising from all of the above
The case for auditability in the decentralized world
Usually the word audit is associated with the world of finance (or for certain geeks, security audits of smart contract code ;). But in the world of computer science and formal logic, all of it can be modelled as state transitions and every such state transition can be recorded, applied, replayed as well as proofs constructed from a batch of such transitions that can be verified as wished.
You *may* audit an entire decentralized application or protocol by yourself…
These state transitions are definitely open and accessible to anyone that wishes to access the transaction history of contracts that make up the above mentioned prediction markets.
But will you?
The reality to contend with is quite intimidating though. Tracing the state changes in such applications that run at scale present challenges with parsing the following:
- relational complexity between several abstractions of smart contract factories
- user identities
- aggregated calculations of the underlying game theoretical models that drive user behavior around these markets
The savvier demographic of decentralized users have come to expect transparency that is automated at scale and available in real-time. Code and algorithms are definitely more trust worthy than their human counterparts taking their own sweet time in verifying and attesting such records and changes in them.
Case in point - Cover Protocol
A seemingly harmless line of code in the smart contract that was otherwise syntactically correct, exposed a loophole that would allow anyone to mint as many tokens as they wished. With the presence of PowerLoom Protocol in such a scenario, such anomalous activity could have been detected and acted on in time.
Cover Protocol Attack Perpetrated by 'White Hat,' Funds Returned, Hacker Claims - CoinDesk
The decentralized finance (DeFi) insurance project Cover Protocol was hacked earlier Monday in an infinite printing…
Why not just rely on the interfaces and frontends as presented by protocols or dApps?
It places an implicit, passive trust on the same party that develops and runs a commercial application or protocol. Apart from building complex applications on smart contracts, they are also expected to provide an accurate view of everything that is happening.
This is not feasible as projects grow in complexity and user interactions give rise to further complex graphs of activity, and it is unfair to begin expecting projects to allocate precious development and infrastructure resources just to satisfy such demands.
This is where PowerLoom Protocol fits in by building on the same formal proofs and state transitions that power blockchains and other such decentralized protocols. Here’s what Polymarket team had to say:
We’re very excited about PowerLoom’s progress, a decentralized way to maintain trust in our product. Easier access to complex data and audits, offering more power to our customers!
We are working with more protocols in the coming weeks. Do join our Discord for more updates.