a16z: Predictive Market Oracle Mechanism plays the role of "Judge, Jury, and Executioner" simultaneously, and contract execution faces settlement arbitration bottlenecks

On January 25, a16z Crypto published a lengthy article titled *What to Do When Prediction Markets Fail*. It noted the biggest challenge in prediction markets isn’t pricing future outcomes—but verifying what actually happened. A key bottleneck to scaling these markets is “how contracts settle.” Earlier this year, former Venezuelan President Nicolás Maduro was detained by U.S. forces. Meanwhile, Polymarket denied Venezuela had been invaded, ruling the “U.S. invasion of Venezuela” market “false”—sparking widespread controversy. Polymarket later clarified: “The market referenced U.S. military action aimed at establishing control; Maduro’s detention and evacuation do not qualify as an invasion.” a16z Crypto criticized the prediction market’s tricky dilemma: contract execution should follow either official information (Maduro’s “win” in the scenario) or consensus from credible reports (the opposition’s “win”). In this political episode, Polymarket’s dispute resolution mechanism acted as “judge, jury, and executioner,” and contract settlements were heavily manipulated.