Price as Truth: Market Prices, Oracle Governance, and the Limits of Decentralized Dispute Resolution

I study the relationship between prediction market prices and decentralized oracle governance using 4,992 matched on-chain vote records across 134 disputed Polymarket contracts resolved by UMA's token-weighted voting mechanism. At the market level, aggregate UMA votes strongly track pre-resolution Polymarket prices (β ≈ 0.58, p < 0.001, N = 85), with the effect nearly doubling in close markets where prices are most informative about genuine uncertainty (β ≈ 1.48, p = 0.026, N = 22). Semantic ambiguity in contract language does not significantly moderate this price-vote comovement in the full sample, but significantly predicts final resolution outcomes in a linear probability model (β = 0.82, p < 0.05).

The three largest voters-controlling 51% of total voting weight-show no on-chain Polymarket activity and no transactions to major cross-chain bridges in my scan. Using CREATE2 address derivation, I link 11% of voters to Polymarket trading addresses but find zero instances where the same individual both votes on a disputed market and holds a non-zero position in that market at vote time. I document that top voters form a highly correlated voting bloc 1 (mean pairwise ϕ ≈ 0.86), and that confident governance flips coincide with doubled trading volume and wider high-low price spreads in UMA's native token.

These findings suggest that prediction market prices function as Schelling points for decentralized oracle governance-providing a salient coordination device in the absence of objective truth-and that individual-level governance capture is structurally unauditable via public ledger data alone.