According to the report, Polymarket, a prediction market, recently saw an incident in which an incorrect on-site broadcast during a UFC event led to extreme volatility in the order book prices. A trader took advantage of the time lag in information transmission by buying contracts that the market had mispriced at a low price, achieving a 100x profit in less than ten minutes.
A misjudged outcome triggers price swings in the order book
During the closing stages of the UFC Fight Night matchup between Marcin Tybura and Tyrell Fortune, the organizers first announced Tybura as the winner. At that moment, the contract price for a Tybura win surged to $0.99, while the contract price for a Fortune win fell rapidly to the minimum quote of $0.01, because the market believed it had already lost. But just a few minutes later, the organizers brought Fortuna back into the octagon to apologize, and corrected the official match result to Fortune winning by unanimous decision.
Traders exploit an information time lag to buy low-priced positions
In the few minutes between the incorrect broadcast on-site and when the organizers discovered and corrected it, an information time lag emerged between the on-site reality and the platform’s contract quotes. Seizing the opportunity, a trader bought in at $0.01 per share, spending $676, before the market had time to react. When the result was corrected, the value of the position rose to $67,608, instantly realizing a 100x profit.
Investors recommend that prediction markets introduce circuit breakers to manage risk
In response to the trading history of this incident, market participants began to examine the risk controls of existing trading mechanisms. Some community views suggested that when handling event outcome resolutions (Market Resolution), prediction markets should consider implementing “circuit breakers” similar to those in traditional financial markets, to prevent similar blunders from affecting verdicts. Meanwhile, current decentralized prediction markets lack a buffer mechanism for handling sudden human oversights, meaning investors who only bet based on probabilities may also suffer enormous losses.
This article, UFC event misjudgment of the outcome, Polymarket trader profits 100x by exploiting the time lag, was first published by the chain news ABMedia.
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