Summary
This proposal introduces an alternative to raising the finalFee by requiring proposers to pay the finalFee in UMA while keeping the bond currency set by the integrator, typically USDC. For example, a proposer might submit 250 UMA (finalFee) + 500 USDC (bond), with rewards paid out in USDC. This dual-token structure introduces friction to reduce early proposals while increasing utility and long-term relevance for the UMA token across integrations.
Motivation
Over the past year, the number of disputed proposals has grown significantly, largely due to increased market volume and activity. While the dispute rate as a percentage has stayed flat or declined, the absolute number of disputes has tripled. This rising volume increases the burden on voters, inflates gas rebate costs, and slows market resolution, posing long-term scalability concerns as UMA adoption grows.
The current Increase Final Fee proposal to raise the finalFee from $250 to $500 focuses on cost recovery rather than dispute reduction. However, most disputes originate from bot errors or first-time proposers who are discouraged by the process after incurring penalties from losing proposals. Raising the finalFee increases costs for proposers but does not meaningfully reduce dispute frequency.
Moreover, proposal incentives already function as a public good. Raising costs alone does not address core behavioral issues such as user error, including misclicks, or proposal baiting by bad actors in Polymarket Discord and forums. As the reward for accurate proposals is negligible ($5 for $750 bonds), it is not a meaningful incentive but can still attract new participants who are not prepared to engage responsibly. This often results in disputed proposals that cause more harm than value. Since many regular proposers contribute to ensure accurate and timely market outcomes, often in support of integrations like Polymarket rather than for direct personal profit, a dual token model is unlikely to deter meaningful participation.
Rationale
Introducing a UMA-denominated finalFee while keeping the bond in USDC would offer several benefits:
- Increase UMA utility by making it necessary for both voting and proposing.
- Add friction by requiring users to acquire UMA, discouraging impulsive proposals, especially from first-time participants.
- Encourage proposers to engage more deeply with the UMA ecosystem, as acquiring UMA would naturally lead to more research and due diligence before proposing, which should be a baseline expectation for all proposers.
- Help maintain UMA’s relevance as dApps begin to adopt their own customized resolution tokens.
Concerns
- Price Volatility: UMA’s fluctuating price means the finalFee would need to be dynamically priced at the time of proposal or on a recurring schedule.
- Complexity: This approach may raise the entry barrier, though most proposers already use automated tools or are familiar with the system.
- Feasibility: Staking and voting with UMA are only supported on the Ethereum mainnet, which limits the viability of a dual-token proposal structure on other chains. Deploying UMA on every chain is impractical, so the dual-token proposal concept is not feasible in its current form.
- Additional considerations are required to determine how this dual-token proposal structure could be implemented across different integrators and chains.
Implementation
- FinalFee and bond would be defined in two separate tokens: UMA for the finalFee, and USDC (or any other token set by the integrator) for the bond.
- dApps can maintain current bond levels while relying on UMA for governance alignment.
- UMA governance would need to implement dynamic pricing logic for UMA-based finalFees.
- Snapshot voting should be opened to more community members to gather broader sentiment.
- This discussion thread is intended to gauge community sentiment before determining the feasibility and implementation path for this proposal.