Key facts
- Polymarket is changing its settlement rules for short-dated crypto contracts.
- The new rules will use time-weighted average prices (TWAP).
- The old rules used single-price snapshots.
- The change follows allegations of manipulation.
- Research and trader complaints pointed to manipulation.
- Allegations involved last-second trades on Binance.
- These trades appeared to influence settlement prices.
- The alleged manipulation often harmed retail traders.
Polymarket, a prediction market platform, is implementing a significant change to its settlement procedures for short-dated crypto contracts. The platform will transition from using single-price snapshots to a time-weighted average price (TWAP) mechanism for determining contract outcomes. This adjustment is a direct response to allegations of market manipulation and subsequent research highlighting these issues. Traders and researchers have pointed to instances where large, last-second trades executed on the Binance exchange appeared to artificially influence the settlement prices of Polymarket contracts. These alleged manipulations often resulted in outcomes that disadvantaged retail traders, who may lack the resources to compete with larger, more sophisticated market participants. The adoption of TWAP is intended to create a more robust and less susceptible settlement process, thereby reducing the potential for such manipulative trading strategies to impact contract resolutions. The move signifies Polymarket's effort to enhance the integrity and fairness of its platform in the face of growing concerns within the crypto trading community.