Polymarket 101

Polymarket is a prediction market platform where users trade on the outcomes of real-world events. Instead of betting against a house, you trade shares with other users in an open, peer-to-peer market. Prices reflect the market’s collective belief in the probability of an event occurring. The platform is non-custodial, meaning you always control your funds. All trades are settled through smart contracts on the blockchain, ensuring transparent and trustless operation.

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Self-Custody

Polymarket operates on a non-custodial model. You maintain full control of your funds at all times.

• Assets are held in your wallet, secured by your private key.
• Trades execute automatically through audited smart contracts.
• Polymarket never takes possession of your funds.
• All trades and positions are recorded onchain and publicly verifiable.
• Settlement happens automatically based on market resolution.

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How Polymarket Works

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Prices Are Probabilities

Every share on Polymarket is priced between $0.00 and $1.00. The price represents the market’s belief in the probability of that outcome occurring. For example, if “Yes” shares for an event are trading at $0.65, the market believes there’s approximately a 65% chance the event will happen.

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Collateral and Tokens

Polymarket uses pUSD (Polymarket USD) as collateral. Every Yes/No pair is fully backed:

• $1 pUSD creates one Yes share and one No share
• Winning shares are redeemable for $1.00
• Losing shares are worth $0.00

Shares are represented as tokens using the Gnosis Conditional Token Framework (ERC1155 standard), enabling seamless onchain trading and settlement.

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Trading

Polymarket uses a peer-to-peer order book (CLOB) for trading. You trade directly with other users, not against the house.

• Buy shares when you think the market underestimates the probability
• Sell shares when you think the market overestimates the probability
• Exit anytime - Sell your position before resolution to lock in profits or cut losses

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Resolution

When an event concludes, markets are resolved through the UMA Optimistic Oracle:

1. A proposer submits the outcome with a bond
2. There’s a challenge period where anyone can dispute
3. If disputed, UMA token holders vote on the correct resolution
4. Winning tokens become redeemable for $1 pUSD

This community-driven process ensures fair and accurate market resolution.

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Why Blockchain

Polymarket is built on Polygon, a blockchain network, for several key reasons:

• Anyone with an internet connection can participate.
• You control your funds, not a centralized entity.
• All activity is publicly verifiable onchain.
• Polygon enables quick, low-cost transactions.
• pUSD is a standard ERC-20 backed by USDC, with backing enforced onchain by the smart contract, so its value stays stable.

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Smart Wallets

Polymarket uses smart wallets so users can trade without manually submitting every onchain transaction. New API users use deposit wallets. Existing Safe and Proxy users can continue using their current wallet. Deposit wallets hold the user’s pUSD and outcome tokens on Polygon and validate orders through ERC-1271. Safe and Proxy wallets remain supported for existing users and integrations. Using smart wallets allows Polymarket to provide an improved UX where multi-step transactions can be executed atomically and transactions can be relayed by Polymarket’s relayer. If you are a developer looking to programmatically access positions accumulated through an existing Polymarket account, continue using that account’s current smart wallet type.

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Deployments

Each smart-wallet user has their own wallet address. See Contracts for all deployed factory and trading contract addresses on Polygon.

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Getting Started

Ready to start trading?