Predicting the Dark Side of the Month in the Market Polymarket's favorite story is "Crowd Intelligence" - allowing the market to vote with money, aggregate everyone's information and judgments, and ultimately emerge the closest odds to the truth. It sounds beautiful, but please allow us to dissect this magical 'truth crystal ball' layer by layer one ⃣ Let's first ask a few questions in Socrates' way First question: Is this a 'group'? When a single whale invests $45 million, the top 10% of large investors control 80% of liquidity, and ordinary retail investors place an average bet of less than $100- is this still called a "group"? Should we still call it an 'oligopolistic market'? If 10 people vote, with 1 person holding 800 votes and the remaining 9 people receiving 100 votes, would you say this is' democracy 'or' money politics'? Question 2: Does money motivate "truth" or "profit"? Economics textbooks tell us that market participants pursue profit maximization. The question arises: when a whale can make money by manipulating odds, hedging risks, or even influencing public opinion, should its money be directed towards "truth" or "optimal strategy"? Is the French whale seeking truth or engaging in risk arbitrage by using private people's survey data to hedge risks? Does the market odds reflect 'what do people believe' or 'what do big players want people to believe'? Question 3: Do the four prerequisites for collective intelligence exist? Classic theory requires participants to make independent judgments, have symmetrical information, consistent incentives, and diverse backgrounds. What about reality? Giant Whale is driving odds for retail investors to follow the trend, while large investors are using private people to survey retail investors and view public data. Giant Whale is hedging against retail investors' speculation, and the Web3 circle has serious homogenization of political tendencies. What's the point of discussing collective wisdom when all four prerequisites are gone? Question 4: Can the market self correct? In theory, mispricing can be corrected by arbitrageurs. But there is a prerequisite: there must be 'objective truth' as the ultimate anchor point. Trump's odds are 60% vs traditional polls at 48%, who is right and who is wrong? Trump's odds are 60% vs traditional polls at 48%, who is right and who is wrong? Even more deadly is that mainstream media cites Polymarket data to report that "the market is bullish on Trump" → the report affects voter psychology → voter behavior affects the election situation → the election situation once again changes the odds. This is not 'discovering truth', this is called 'self verifying prophecy'. When the market itself becomes a source of news and a force of public opinion, can it still maintain objectivity? Question 5: Who is defining 'truth'? The most heart wrenching question. Polymarket relies on UMA oracle to determine the 'truth'. A scandal occurred in August this year: someone manipulated the settlement results of a market with 5 million UMA tokens (25% of total voting rights). Ironically, the mechanism design of UMA itself encourages "following the majority" rather than "verifying facts". There are rewards for investing in the right direction, and fines for investing in the wrong direction, so the optimal strategy is not to search for the truth, but to guess how others will invest. When the 'truth' is decided by capital voting, is this a victory for decentralization or a 2.0 version of gold politics? two ⃣ Data will tell you a crueler truth A blockchain analysis company has discovered a significant amount of fake wash trading volume on Polymarket. This is the "liquidity paradox" of Polymarket: theoretically, high liquidity is needed to ensure price accuracy, but high liquidity precisely attracts speculators and manipulators, rather than "seekers of truth". After the UMA manipulation case, Polymarket's handling became even more magical: they refused to refund the victims, citing that "we will improve the mechanism in the future". We know there are vulnerabilities in the system, but we don't care about your losses. Pay attention next time The biggest irony of decentralization lies in this: when something goes wrong, no one is responsible. three ⃣ The War of Prophecy: A Power Game about "Who the final say" If Polymarket is a 'truth machine', the oracle is the 'judge' of this machine. But over the past year, Polymarket has become increasingly dissatisfied with its own judges. From 2022 to 2024, Polymarket will rely entirely on UMA Optimal Oracle and promote "decentralized arbitration". In February 2025, we will start collaborating with EigenLayer and UMA to develop the "next-generation oracle". The official announcement is a 'technological upgrade', but in reality, it is dissatisfaction with the current situation of UMA. In August, it was forced to upgrade to MOOV2, which restricted proposals to only whitelist users. This is a regression from decentralization to centralization - sacrificing censorship resistance to prevent manipulation. Integrate Chainlink to handle price markets in September, acknowledging that UMA cannot handle all scenarios. But Chainlink can only handle objective questions such as whether the BTC price has reached $100000, and the core political and cultural subjective markets still rely on UMA. In October, CEO Shayne Coplan tweeted implying the launch of POLY token, possibly building his own oracle. After outsourcing for so many years, I realized that I still have to do it myself This evolutionary path reveals a cruel truth: Polymarket is not looking for a better oracle, but for a more obedient oracle. From "decentralized outsourcing" to "centralized internalization", Polymarket has acknowledged a fact through action: the oracle is too important to be handed over to others. But the question arises - when Polymarket controls the oracle on its own, to whom will POLY tokens be allocated? How to prevent the voting rights from being manipulated by large investors again? The answer is: it cannot be solved. Because as long as there are tokens, there will be buying and selling; Where there is buying and selling, there is concentration; Where there is concentration, there is manipulation. Dead loop. four ⃣ Ultimately, who has the right to define the truth? Returning to the original question: Did the French whale's $45 million predict the truth or create the truth? The answer may be both, and that's the scariest part. Polymarket claims to be a 'truth seeking machine', but in reality it operates more like a 'truth pricing machine'. What's the difference? The former assumes that the truth objectively exists and the market only discovers it; The latter is to price different versions of the "truth" through market mechanisms, and the one with the higher price wins. When capital is large enough, it can buy not only the odds, but also the public's perception of the 'truth'. The above.