Polymarket is a prediction market platform. Polymarket has grown to host more than $100 million in total volume to date.
Counterparty risk is a risk that a counterparty will not pay as obligated by a bond, derivative, insurance policy, or other contracts.
In the cryptocurrency sphere, counterparty risk is discussed in relation to
- Centralized exchanges. They control users' private keys and may get hacked, lose users’ coins, or face other issues that would lead to the exchange defaulting on their obligations to users.
- DeFi applications relying on the use of oracles (e.g. stablecoins and decentralized betting protocols). These oracles, which let the blockchain know about the BTC/USD exchange rate or the outcome of the US presidential election, could be hacked or corrupted.
Will Polymarket default on an obligation to hand over their users’ USDC on request or wrongly resolve a market?
- Market is considered to be "wrongfully resolved" if Polymarket confirms that or if a supermajority of Metaculus moderators/admins (2/3) thinks that the resolution does not correspond to resolution criteria.
- This question will not resolve positively if the affected users are compensated within a week after the problem is noticed (e.g. on Polymarket Discord).
- This question will resolve positively upon a report of a default by a company, or by reliable news media.
- A temporal trading & withdrawal halt would not count if it lasts less than a week.
- A halt in a specific region due to regulation would not count.
- A halt due to network-wide attack (s.a. 51% attack or DDoS) would not count.
- If the platform ceases to exist (but doesn't default), or is acquired, the question resolves negatively if their customers can assess their coins &c.
- A hack resulting in loss of client's coins would not suffice by itself e.g. if the company offsets all the losses.
- If, as Bitfinex in 2016, the affected company only partly offsets the loss and e.g. provides clients with compensation in the form of a new token the question will resolve positively.
- In cases like a vulnerability in a smart contract or in case an oracle is hacked, resulting in a loss of clients’ money/cryptocurrency, the question assumes that the company is responsible for clients losses, even if formally clients agreed to use a smart contract/oracle as it is.
If no such qualifying event occurs before January 1, 2023, this question will resolve negatively.
[Edit note] Sylvain 2021-05-27: clarified that a supermajority is 2/3.