Polymarket has officially migrated its short-term crypto prediction markets to a time-weighted average price (TWAP) settlement mechanism, powered by Chainlink Data Streams, following months of trader complaints and an academic investigation that uncovered systematic manipulation. Researchers from Stanford University and Singapore Management University identified 821 accounts that exploited single-price snapshots to extract $8.2 million, with large orders on Binance intentionally distorting Bitcoin’s price in the final seconds before settlement and then quickly reversing. The study revealed that 93% of losses in manipulated windows fell on retail traders, prompting sharp criticism of the platform’s previous settlement design.
The upgrade replaces point-in-time snapshots with TWAP for 5-minute, 15-minute, and 4-hour markets. Specifically, 5-minute markets will now use a 30-second TWAP, while 15-minute and 4-hour markets will use a 60-second TWAP, with data supplied by Chainlink’s low-latency oracle network. This integration follows Chainlink’s official launch of TWAP Data Streams, which aims to bring more accurate and manipulation-resistant pricing to prediction markets. Polymarket, which has processed over $9 billion in lifetime trading volume, positions the move as a trust-building measure to attract and retain users.
To maintain liquidity during the transition, Polymarket announced $1 million in rewards distributed across BTC, ETH, SOL, XRP, HYPE, BNB, and DOGE prediction markets throughout August. The campaign underscores the platform’s effort to restore confidence after the manipulation revelations. The switch to Chainlink’s infrastructure not only seals a critical pricing loophole but also deepens the partnership between the leading prediction market and the decentralized oracle network.
