Author: Changan I Biteye Content Team Do you know why you can't beat the leaders on Polymarket? Because they scrutinize the rules like lawyers scrutinizing contracts. In April 2026, a controversy on Polymarket regarding the Venezuelan leader caused a stir in the community. A market on Polymarket asked, "Who will be the leader of Venezuela at the end of 2026?" Many traders instinctively thought: Maduro is in a US prison, Delcy is in Caracas leading the cabinet, and Delcy is clearly the one in power, so they bet on Delcy. But the rules and supplementary explanations clearly state: "officially holds" refers to the person officially appointed and sworn in. The UN-recognized Venezuelan government has not formally removed or replaced Maduro, and official government information still identifies him as president. The rules also specifically add: "A temporary authorization to exercise presidential powers does not constitute a transfer of the presidency." According to these rules, even if Maduro is still in a US prison, he remains the legitimate president of Venezuela. There are many similar examples: After Polymarket issued its stablecoin, the market disputed the "FDV of the Polymarket token": whether a stablecoin is considered a token is a matter of a single word; Iran's uranium: the standard of "agreement," conditional statements vs. formally signed agreements. Behind these cases lies the same logic: at Polymarket, rules are the core. However, when disputes arise regarding the rules, Polymarket has a complete adjudication process to resolve them. This article will introduce how this mechanism works, and where it is similar to, and where there are fundamental differences between, and traditional courts. I. Polymarket's Adjudication Mechanism Ambiguity in the rule text not only causes pricing disagreements, but it can also become a formal dispute during settlement. Polymarket handles a large number of market settlements daily, with markets involving political statements, diplomatic pronouncements, and military actions being particularly prone to disputes. Disputes are actually a normal part of the predictive market. Ambiguity creates pricing disagreements during the trading phase and becomes a dispute during the settlement phase—the same issue manifesting differently at two points in time. To resolve these disputes, Polymarket has established a complete adjudication process, with two paths: normal settlement and dispute adjudication. Step 1: Submit a Propose. When the market meets the settlement conditions, anyone can submit a proposal, stating whether the market should rule YES or NO. Submitting a proposal requires a 750 USDC deposit as collateral; this deposit serves as the submitter's endorsement of their judgment. If the market has no objections, the user who submitted the proposal will receive a 5 USDC reward.Currently, only 1782 users have submitted proposals in the market, with the highest-earning user accumulating $281K. The second step: a 2-hour challenge window (Dispute). After a proposal is submitted, a 2-hour challenge period begins. This is the first fork in the process. If no one raises an objection within 2 hours, the system assumes the proposal is correct, the market settles directly, and the process ends. Most markets follow this path. If someone believes the proposal result is incorrect, they can challenge it within these 2 hours, requiring a 750 USDC stake. A successful challenge earns a 250 USDC bonus. Few users specialize in Disputes; the highest-earning user in the Dispute phase is 0xB7A, with a profit of $17123. The third step: a discussion period of up to 48 hours. After entering the dispute track, both parties enter the UMA Discord discussion phase. The purpose of this phase is to allow each party to submit arguments and evidence: interpretations of the rule text, relevant news reports, historical precedents, official statements—any material that can support their position can be submitted at this stage. The discussion period, lasting up to 48 hours, is the only stage in the entire process where reasons can be fully presented. The quality of this stage largely determines the direction of the subsequent vote. Step Four: 48-Hour Voting. After the discussion, the UMA token holders vote, which is divided into two 24-hour phases. The first phase is blind voting, requiring each voter to make an independent judgment based on their own understanding of the rules, rather than following the lead of large holders. The second phase is public voting. Votes not publicly displayed in this phase are considered abstentions and are invalidated. After the voting, UMA sets two settlement thresholds that must be met simultaneously to complete the decision: Participation Quantity: At least 5 million tokens are required to participate in the vote, ensuring sufficient representativeness of the decision. Absolute Consensus: The winning party's vote share must exceed 65%, not simply a 51% majority. If both thresholds are not met simultaneously, the vote fails, and a re-vote is initiated, up to four times. If there is still no consensus after four rounds, Polymarket has the right to directly intervene in the decision. Step Five: Automatic Settlement. Once the voting results are confirmed, the market automatically settles the accounts, and funds are allocated according to the results. There are no appeals, no retrials, and no opportunities for remedies. The entire dispute resolution process, from the submission of a challenge to the final settlement, is typically completed within a week. II. Polymarket and Traditional Courts: Same Logic, Different Design On the surface, the adjudication process in Polymarkets is highly similar to that of traditional courts: both have a party making a claim, a party challenging the claim, a discussion and presentation phase, and ultimately, an adjudicator issuing a result.However, the two systems differ fundamentally in one design: the separation of powers. The courts' power is isolated. In traditional courts, plaintiffs and defendants only have the right to present their cases, not the right to adjudicate. Judges only have the right to adjudicate, not the right to take sides. More importantly, judges and cases must remain independent. If a judge has any conflict of interest with a case, they must recuse themselves, and a different judge must preside. The adjudicator and the interested party are never the same person. Polymarket lacks this separation. UMA token holders are the adjudicators, but they can simultaneously hold positions in the disputed market. The direction of the adjudication directly affects their profits and losses. The adjudicator and the interested party being the same person is called a conflict of interest in traditional courts, which is subject to mandatory recusal, but is legal and normal in Polymarket. This design flaw is the root of the following two problems: 1️⃣ Why does the discussion phase fail? In court, the plaintiff's and defendant's positions are fixed from the moment the lawsuit is filed. Lawyers will not change sides midway through the trial, nor will they withdraw their statements simply because the opposing side is aggressive. Clear positions and defined roles are the foundation of the entire debate. The UMA Discord discussion faces two problems. Herd mentality: The discussion is conducted openly and anonymously; once an influential KOL expresses their opinion, it easily leads to a bandwagon effect. Many participants simply post "P1" or "P2" without providing any reason. Shifting stance: Participants often hold positions in the same market. Changes in positions naturally lead to shifts in stance, which explains why it's common to see opinions posted and then deleted on the UMA Discord. The root of both problems is the same: the arbitrators and stakeholders are not separated. 2️⃣ Why are the rulings opaque? In court, judges hear complete statements from both sides before issuing a ruling. The ruling specifies which side's arguments were adopted, the basis for the decision, and the reasons for the ruling. The losing party may be dissatisfied, but at least they know where they went wrong and can strengthen their arguments next time. These rulings form a system of precedents that can be studied, and subsequent judges, lawyers, and parties can cite them, making the standards of judgment verifiable, learnable, and predictable. After the UMA vote, there is only one result: YES or NO. Neither side in the discussion knows what the voters read, believed, or why they leaned towards one side. If they win, they don't know which argument played a role; if they lose, they don't know where their arguments fell short. Because the logic of the judges is never made public, the results of the disputes are difficult to learn from and accumulate. Court rulings form a system of precedents; Polymarket's decision leaves only one outcome.III. In conclusion, the Polymarket is never simply a market for "guessing events correctly." It's more like a system that translates real-world events into legal texts, and then translates those legal texts into settlement results. Understanding the rules is just as important as conducting research. The advantage of a leading player often stems from a deep understanding of the rules—knowing what the system recognizes and what the rulings will accept. Whoever recognizes the gap between "reality" and "rules" earlier has a greater chance of profiting from price discrepancies created by misinterpretations, controversies, and emotions. [Biteye]