Apologies for the delayed response, I was on vacation for a few days.
@pemulis1 You’ve made some great points and I think Polymarket would be happy to experiment with UMA-denominated bonds and rewards for some markets and make a commitment to voting whenever possible.
I also agree that a bot responding to questions when possible is a desirable end state of the Optimistic Oracle. Market reporting should be as open and competitive as possible to drive speed up and prices down! This is exactly the behavior that the Polymarket integration is catalyzing which is in turn making the OO a more compelling solution for other projects.
@Mhairi The size of the request is based on a few factors. First conversations with RL suggested that if the liquidity mining program funded from their balance went well it would make sense for Polymarket to request an extended, expanded grant from the UMA DAO. This request is 3x longer and on a weekly basis only 1.65x larger. Second, an expectation for continued Polymarket user growth.
Lastly, the rapid expansion over the first half of the program is expected to coincide with new market structure improvements to Polymarket that will enable significantly more TVL, volume and markets. To your point that future reward expectations will motivate users to switch to alternative markets, I want to stress that this is a very small liquidity mining program in the broad context of DeFi and that Polymarket has become the largest prediction market in the world without a token and, until recently, without a liquidity mining program. This period of incentivization allows Polymarket to experiment with structural improvements that will make it more scalable and sustainable. This is quite different than the one off uPUNK and uGAS historical comparisons as Clayton highlights.
“I think that the (relatively) high number of disputes that we have seen recently have prompted some interesting thinking and is a general benefit to the UMA protocol.”
I strongly agree on this point.
“I guess my primary concern is that a 40 week programme (incl the initial 10 weeks) creates future expectations, which may see liquidity shift to alternative markets once that ends.”
Polymarket has become the largest prediction market in the world without a token and, until recently, without a liquidity mining program. This period of incentivization allows Polymarket to experiment with structural improvements that will make it more scalable and sustainable.
“The conversations in our community around disputes have been extremely stimulating and useful for the oracle. Both teams have put a lot of effort into this working well, and it is indeed a groundbreaking relationship for UMA’s oracle.”
I agree! I think it is safe to qualify Polymarket as UMA’s most established integration to date.
The initial grant was $100000 for 10 weeks. The proposed grant is $3MM for a 30-week period which is 10 times more.”
It seems your math is a bit off. To clarify, the original grant was 100,000 tokens over 10 weeks. The proposed grant is 495,000 over 30 weeks. 3x longer, and only 1.65x greater on average per week.
@Optimistic These are great questions. Will respond to them below.
- What is happening with the UMA when it is distributed?
Admittedly, I am not aware of a very thorough investigation of what is done with the UMA once it is distributed, however many of the Polymarket community members now tout $UMA as one of their holdings. Some on-chain metrics could be pulled (ie number of wallets still holding UMA that claimed UMA), but none are seem straightforward or very accurate.
- What KPIs are you going to use to better distribute rewards?
Polymarket is interested in extending the program with little disruption, so ideally Polymarket and the UMA community can come up with some amount under the current proposal. I worry the process to decide on KPIs will be overly cumbersome and they will ultimately be a bit contrived.
- How can we convert holders into long term users and supporters of the protocol?
If Polymarket users are confident in the functioning of UMA as an on-chain oracle, I would imagine that they will champion it in other contexts.
- How well have you done at preventing abuse of the mining system?
I would say Polymarket has done a stellar job preventing abuse and the program is designed to be adaptive in the face of unanticipated, counterproductive behaviors. The community actively polices each of the exploitive behaviors you have discussed and each week sandwichers and wash traders are removed from the generated reward proofs. This has set a precedent that has discouraged this type of behavior. Additionally, the ruleset has been evolved multiple times (see Polymarket discord) to improve its efficiency and further focus its impact. Polymarket monitors various health metrics for the program including volume to liquidity ratio, volume dispersion, the number of markets with significant liquidity etc. All Polymarket trading is on-chain and auditable by anyone and there are multiple community-built data tools that are widely used including PolymarketWhales.
@mrice32 As @CrunchWrapSupreme highlights, Polymarket has contributed USDC in amounts roughly equal to UMA contributions over the initial 10 week period, but for the same reason RL is delegating to the DAO past that point Polymarket is also delegating to the DAO for additional rewards. It’s not sustainable for entities without a token to contribute incentives on the scale of a DAO. With that said, Polymarket continues to make significant financial contributions to liquidity operations including bootstrapping markets with initial liquidity, This grant would complement Polymarket’s existing activities, providing additional fuel for market formation and development.
To your point of Polymarket getting more value per dollar than UMA does, I am not sure I agree. Polymarket is a customer of UMA, the protocol. I don’t think it is unreasonable for UMA to financially motivate this integration. It’s very common for growth stage companies to spend aggressively on user growth and I think this is a very similar relationship. For example, market deployers currently fund a $50 UMA resolver reward per sports game resolution which, compared to alternative sports oracles, is exorbitantly expensive. Sufficient and substantially cheaper alternatives to UMA (ie chainlink) exist for this specific use case, but Polymarket has committed to UMA as an integration and is helping improve unit economics in the process. It’s my opinion, although biased, that UMA should aggressively preserve this integration, which means opening up the war chest just a little. The exact purpose of the 35M UMA treasury is to “be distributed to encourage protocol growth”.
Overall, I think the relationship between Polymarket and the UMA community has been quite symbiotic to date: a win-win. I hope that my answers above can provide missing detail and additional clarity. Polymarket would like to continue the existing liquidity mining program without any gaps, which means a tight turn around on the proposal and vote. Given the positive impact Polymarket has had on the progress of UMA’s Oracle in such a short period of time, and the reasonable ask in the proposal, I hope we can push this over the line quickly so we can get back to building together!