Summary
This proposal is to increase the finalFee (a component of proposal and disputing bonds) from $250 to $500. The number of dispute resolution votes are currently a strain on gas rebate costs and voter time and will become prohibitive as the number of requests continue to increase. Increasing the finalFee will increase the cost of incorrect proposals and disputes and therefore reduce oracle dispute rates and dispute resolution votes.
Motivation
Increase in Disputes
While we have seen a downwards trend in the oracle dispute rate in the last year, the increased number of markets has resulted in the number of disputes increasing roughly 3x in the last year.
Unnecessary Disputes
The far majority of disputes are not necessary to correct market resolution, but rather are due to early proposals or incorrect disputes. The values shown below for the month of May are:
- Successful Dispute resolved too early/P4 (light blue) = 0.9%
- Successful Dispute resolved Non-P4 (navy) = 0.1%
- Unsuccessful Dispute (green) = 0.8%
- Total Dispute rate = 1.8%
UMA’s voting on dispute resolution also shows that 98% of votes reach >90% consensus. This shows that the far majority of disputes are not actually contentious to UMA voters. These obviously incorrect proposals and disputes are largely made due to:
- Proposers racing to propose markets first resulting in premature proposals
- User error due to accidents or new proposers
- Prediction market traders making proposals or disputes to affect betting odds on the market
Cost of Disputes
The high number of disputes puts a higher burden on voters who have to evaluate on average 6 votes per voting cycle and sometimes more than 20. This results in voters spending less time per vote which can lead to a reduced voting accuracy.
Risk Labs also reimburses gas spent by voters resolving disputes and has historically been reimbursed for these costs by UMA DAO. The average 2025 vote costs $584 in gas rebates. This results in average monthly gas rebates of $45k and in times of high gas and Ethereum prices has cost Risk Labs up to $120k in one month.
The above negative effects are challenging right now, but scale linearly with the number of requests and will become prohibitive as UMA scales in the future.
Rationale
UMA will need to address the scaling problems identified above with multiple solutions that reduce the number of disputes voted on by UMA stakers. However, raising bonds is essential to the quality of dispute resolution and the economic feasibility and scalability of UMA. We expect that raising bonds will reduce the number of unnecessary disputes identified in the Motivation section.
The benefits of raising bonds are:
- The cost of incorrect proposals or disputes intended to manipulate prediction markets is increased.
- Proposers should be more cautious to wait until the trigger event has passed which will result in less unnecessary disputes about trigger event timing.
- Less unnecessary disputes result in faster resolution (undisputed markets resolve in 2 hours, but disputed markets resolve in 28-96 hours).
- Reduced spam disputes. We’ve seen 5 disputes recently that are on poorly formed requests.
Potential downsides of raising bonds are:
- It increases the risk (and reward of disputing). As shown above the far majority of disputes are:
- Successfully resolved P4: obvious P4s will still be high EV disputes and marginal P4s (a sports game resolved correctly but 3 minutes too early with a 2 hour challenge period) are inconsequential to market resolution
- Unsuccessful: it would be beneficial to everyone if these disputes did not happen
- It could increase the time from a market trigger event to proposal
- Currently we see objective requests proposed very quickly (hard to measure, but this is usually within minutes for sports games) while the challenge period is currently 2 hours. This means that the time from trigger event to proposal is a very small portion of the overall time to market resolution. Therefore, we strongly expect that increasing bonds for objective markets will not noticeably affect time to resolution, especially for objective markets like sports games or prices. Further, increasing the bonds makes it safer to reduce the challenge period as the cost of an incorrect proposal is higher and there is higher incentive to monitor proposals.
Implementation
First, an explanation of how bonds work on UMA’s currently use optimistic oracles.
Optimistic Oracle V2:
The “totalBond” that proposers and disputers must commit is a sum of two parts:
- The “finalFee” which is set by UMA governance, which is currently 250 USDC.
- The “bond” which is set by the integrator, typically varies from 100 to 500 USDC.
In the case of disputes:
- The losing side loses their “totalBond”
- The winning side receives their “totalBond” back plus half of the loser’s bond
- UMA DAO receives the loser’s “finalFee” and half of their bond.
Optimistic Oracle V3:
The “bond” is set by the integration. The minimum “bond” is two times the “finalFee”.
In the case of disputes:
- The losing side loses their “bond”
- The winning side receives their “bond” back plus half of the loser’s “bond”
- UMA DAO receives the loser’s “finalFee”.
The final fee is set for each whitelisted bond currency on every supported chain. Final fees are currently set to be $250 for stablecoins and close to $250 for non-stablecoins. This proposal is to double the final fee for commonly used whitelisted bond tokens on commonly used chains to $500.
If passed via onchain vote, the revised final fees would only affect requests and assertions made after onchain execution of the proposal. The UMA core team will also coordinate with integrations to prepare them for the change and advise if they should adjust their bonds.