Polymarket has switched to Chainlink-computed time-weighted average pricing, abandoning the single-point snapshot settlement that researchers said let a small group of traders drain millions from five-minute Bitcoin bets. The change took effect at 00:00 UTC on Aug. 7, following weeks of scrutiny over a manipulation study that pointed to coordinated spot-market moves.
Why the change came now
A working paper from Stanford and SMU researchers analyzed Polymarket's five-minute Bitcoin contract and found that 821 trader wallets captured an estimated $8.2 million through repeated cycles of manipulation. Bloomberg Law reported that the paper documented one-sided bursts on Binance in the final seconds before each five-minute bet closed, with retail liquidity traders absorbing most of the losses.
Those findings landed just as Polymarket was already planning to overhaul its settlement mechanism. The timing forced the issue into public view.
How the new TWAP pricing works
Under the new system, Polymarket uses Chainlink Data Streams mainnet TWAP feeds. Five-minute markets settle on a 30-second time-weighted average; 15-minute and four-hour markets use a 60-second window. Instead of a single tick deciding a market's outcome, the final price is computed as an average over a short span, making last-second spikes far harder to exploit.
Rollout and liquidity incentives
Polymarket's Real-Time Data Stream, built to relay Chainlink-computed mainnet TWAP updates, launched Aug. 4. The platform is also offering $1 million in liquidity rewards across affected markets during August to ease the transition.
The $1 million in August liquidity rewards gives traders a month to adjust to the new pricing mechanism. With the RTDS already live and the TWAP cutover complete, the next test is whether the new settlement holds up under real trading pressure.
