2022 TIME Person of the Year | How UMA handled a Polymarket dispute edge case
UMA’s optimistic oracle (OO) is a powerful and flexible tool that can bring any type of real-world data on-chain to settle smart contracts or transactions in protocols like Polymarket, a leading Web3 prediction market.
Prediction markets use natural language to allow people to wager about future events. But despite the best efforts of market creators, language can sometimes be imprecise and unanticipated edge cases can arise with market participants disagreeing on the correct outcome. Those disputes trigger UMA’s involvement to resolve those disputes and to settle markets.
Determining the “truth” about who (or what) was named as TIME’s 2022 person of the year turned out to be a case of such ambiguity. UMA provides the dispute resolution layer to Polymarket, which had a market on exactly that issue.
The market asked “Will Volodymyr Zelensky be the 2022 TIME Person of the Year?”
Prediction markets typically include a suggested resolution source; a website or data information service for people to receive data. For the Zelensky market, the resolution source was TIME’s Person of the Year website, which leads to this page.
But the answer maybe a little more complicated. A naïve interpretation, based only on the title of the market and the resolution source, would suggest that UMA’s OO should settle the market as YES, Zelensky was the person of the year — but sometimes the resolution source doesn’t tell the whole story.
Prediction markets can have ambiguous results. So frequently, ancillary data can be used to offer guidance to reduce confusion or disagreement. In the case of the Zelensky market, the criteria emphasized that the market would only settle to Zelensky if he was named as the exclusive Person of the Year. A more careful inspection of TIME’s website reveals that TIME named the 2022 Person of the Year as Volodymyr Zelensky AND the Spirit of Ukraine.
Was Zelensky 2022’s TIME Person of the Year?
For this market, the ancillary data stated: “If the President of Ukraine Volodymyr Zelensky is named as TIME’s Person of the Year for 2022, this market will resolve to “Yes”. Otherwise, it will resolve to “No”.
However, the full market criteria also included a clause designed to reduce ambiguity in case Zelensky was included as part of a larger group.
“…this market will resolve to “Yes” only if exclusively Volodymyr Zelensky is named as TIME’s Person of the Year. If, for example, “Defenders of Kyiv” or “People of Ukraine” or any other group is named as 2022 TIME’s Person of the Year, this market will resolve to “No”.
Debate took place in UMA’s Evidence Rationale discord channel over the interpretation of the qualifying clause, much of it hinging on the meaning of the word “exclusively”.
Some felt Zelensky was named as person of the year, but the inclusion of the “Spirit of Ukraine” meant UMA tokenholders should vote NO, because he wasn’t named exclusively. Others felt that being named was sufficient.
An interpretation of the term “exclusively”, to mean solely, meant the inclusion of the Spirit of the Ukraine ran foul of the clarifying clause, and therefore the market fine print would require a NO vote, despite the article title and source pointing towards a YES vote.
However, there is an alternative, or contrasting, interpretation of the term “exclusively”, and that’s “inclusively.” The criteria examples provided in the qualifying clause included the “Defenders of Kiev” and “People of Ukraine”.
Under this interpretation, Zelensky is named twice: once exclusively by name, and also inclusively as part of the “the Spirit of Ukraine”.
One tokenholder pointed out the difficulties with the first interpretation of the term “exclusively”.
If “exclusively” is taken to mean as Zelensky was the only named recipient, the elements of the ancillary data are incompatible. The first section says that if he is named, the market must resolve to YES, but the qualifying clause means that there would then be some circumstances where he could be named, yet the market would still resolve to NO.
Although initial sentiment based on the qualifying clause appeared to support the original proposer’s NO vote at first, more careful analysis led many to reconsider their initial interpretation. Many voters said they changed their minds after the community held an open, public discussion on a Twitter Space, which you can listen to here.
In the end, the market was resolved as YES, upholding the disputer and confirming that Volodymr Zelensky was indeed named as TIME’s 2022 Person of the Year.
Challenges like these strengthen the OO
We shouldn’t shy away from this kind of challenge. Prediction markets are only just becoming widespread and the knowledge and skill to develop unambiguous markets is still emerging. In the interim, UMA’s dispute mechanism allows some time for pause and reflection when things may be unclear, allowing tokenholders to consider all angles.
The OO can validate simple data or a statement and measure the real world, but it can also serve as an arbiter and provide the most reasonable outcome for ambiguous or complex pieces of information or imperfect markets.
As the UMA community grows and the OO becomes more widely used, we expect more debates and challenges like the Zelensky market on Polymarket as the prediction market space matures. These situations battle-test the OO and will make it stronger, while energetic discussions will stoke energy within the community and leading to engaging discussions and decisions.
It’s an empowering process for the market participants and tokenholders alike.
Mhairi McAlpine is a community manager at UMA.
