Every prediction on Polymarket is represented by outcome tokens. When you trade, you’re buying and selling these tokens. Your position is simply your balance of tokens for a given market.
Outcome Tokens
Each market has exactly two outcome tokens:
| Token | Redeems for | If… |
|---|
| Yes | $1.00 | The event occurs |
| No | $1.00 | The event does not occur |
Outcome tokens are always fully backed. Every Yes/No pair in existence is
backed by exactly $1 of USDC.e collateral locked in the CTF contract.
Split
Convert USDC.e into outcome tokens. Splitting $1 creates 1 Yes token and 1 No token.
$100 USDC.e → 100 Yes tokens + 100 No tokens
- Create inventory for market making
- Obtain both sides of a market
Trade
Buy or sell tokens on the order book. This is how most users acquire positions.
- Buy Yes at
$0.60 → Pay $0.60, receive 1 Yes token
- Sell Yes at
$0.60 → Give up 1 Yes token, receive $0.60
You can sell your position at any time before resolution.
Merge
Convert a complete set of tokens back into USDC.e. Merging requires equal amounts of Yes and No tokens.
100 Yes tokens + 100 No tokens → $100 USDC.e
- Exit a position without trading
- Convert accumulated tokens back to collateral
Redeem
After a market resolves, exchange winning tokens for USDC.e.
| Outcome | Yes tokens | No tokens |
|---|
| Event occurs | Worth $1 each | Worth $0 |
| Event doesn’t occur | Worth $0 | Worth $1 each |
100 winning tokens → $100 USDC.e
Position Value
The value of your position depends on the current market price:
Position value = Token balance × Current price
Position value = 100 × $0.75 = $75
Profit & Loss
Your profit depends on how the market resolves compared to your entry price.
Example: Buying Yes at $0.40
| Scenario | Outcome | Return | Profit |
|---|
| Event occurs | Yes wins | $1.00 | +$0.60 per token (150%) |
| Event doesn’t occur | No wins | $0.00 | -$0.40 per token (-100%) |
Holding Rewards
Polymarket pays a 4.00% annualized Holding Reward based on your total position value in eligible markets. Your total position value is randomly sampled once each hour, and the reward is distributed daily. The rate is variable and subject to change at Polymarket’s discretion.
Example: Selling before resolution
You can lock in profits or cut losses by selling before the market resolves:
- Bought Yes at
$0.40
- Price rises to
$0.70
- Sell at
$0.70 → Profit of $0.30 per token (75%)
