What Is Polymarket and How Does It Work?

TL;DR

• Polymarket is a prediction market where Yes/No contract prices represent probability. It settles in crypto (USDC) on Polygon, and takers pay a fee that varies by category; makers pay $0 and earn a share of that fee back as a rebate.
• It's the largest crypto-native prediction market, not the largest overall. Kalshi has led raw dollar trading volume industry-wide since spring 2026, while Polymarket still carries a far larger user base and the broadest event selection outside sports.
• Most markets resolve through UMA's Optimistic Oracle: a $750 proposal bond, a 2-hour challenge window if undisputed, and up to 4-6 days if a dispute escalates to a UMA token-holder vote.
• Polymarket paid a $1.4 million CFTC penalty in 2022 for running an unregistered trading facility and barred US persons afterward. Its new, separate Polymarket US product became CFTC-regulated in November 2025 and is still in a phased, sports-only rollout.

Heard someone call Polymarket "the real-time odds on everything" and wondered what you're actually buying when a contract says $0.70? You're buying a claim on $1, paid only if a specific event happens by a set date. Polymarket is a prediction market: traders buy and sell Yes/No contracts tied to real-world outcomes, elections, interest rate decisions, who wins the next World Cup, and the price is the market's live estimate of probability. A contract at $0.70 means traders think there's a 70% chance that outcome happens. If it resolves yes, it pays $1. If not, it's worth nothing.

That's what Polymarket is. How to use it is almost as simple: pick an event, pick a side, buy the contract, and either hold it to resolution or sell it back before then as odds shift.

How Does Polymarket Actually Work?

Every market on Polymarket starts as a yes-or-no question with a fixed resolution date. "Will the Fed cut rates in December?" "Will this bill pass the Senate before the end of the year?" Traders take the Yes side or the No side by buying contracts, and the two sides always sum to roughly $1.00 before fees.

Say a Yes contract is trading at $0.35. That implies a 35% chance the event happens. If it does, that contract pays $1. If it doesn't, it expires worthless. The price isn't set by a bookmaker. It's set by whoever is willing to trade at that level, which means it moves constantly as new information arrives and traders reposition.

Polymarket runs an order book, not a bookmaker's line and, these days, not an automated market maker either. It started out pricing early markets through an AMM, Uniswap-style, but moved to a central limit order book as it scaled, the same matching model Kalshi and most of the other major platforms use.

Polymarket runs on-chain, settled in crypto (primarily USDC), which is what makes it accessible to traders anywhere in the world without a brokerage account. It's the largest crypto-native prediction market by volume, though not the largest prediction market overall anymore. Kalshi has led raw dollar trading volume industry-wide since spring 2026. Polymarket's deep liquidity still means large positions can move in and out without distorting the price much, a luxury thin markets don't have. A single large position in a market with few traders can swing the price well past where the underlying probability actually sits.

How Do You Get Started on Polymarket?

Using Polymarket breaks down into a few concrete steps:

1. Set up a wallet. Polymarket runs on Polygon, so you'll need a crypto wallet connected to that network before you can trade.
2. Fund it with USDC. Positions are denominated in USDC, the stablecoin pegged to the dollar, so that's what you deposit to trade.
3. Find a market. Browse by category (politics, sports, crypto, culture) or search for the specific event you want to track.
4. Buy a side. Choose Yes or No at the current price. That price is your cost basis and your implied probability.
5. Hold or exit. You can hold the contract until the event resolves, or sell it back on the open market anytime before then if the price moves in your favor, or against you.

None of this requires ID verification on Polymarket's international platform, the one most non-US traders use. That's a different model from a CFTC-regulated exchange like Kalshi. It's also different from Polymarket's own separate US product, Polymarket US, which does require full identity verification, the same standard as Kalshi, since it clears trades through a registered broker rather than a self-custodied wallet. Ready to start on the international platform? Sign up on Polymarket.

How Much Does It Cost to Trade on Polymarket?

Polymarket charges a fee only on the taker side of a trade, the side that fills against a resting order. Makers, the side whose resting order gets filled, pay $0 and instead earn a rebate funded by a share of the fees takers pay.

The fee itself scales with how far a price sits from a coin-flip: it's calculated as a category-specific rate multiplied by the price times one minus the price, so the fee peaks at a 50-cent contract and shrinks toward either end of the range. Rates vary by category and have changed more than once in 2026 as Polymarket has revised its fee schedule, so treat any specific percentage you read, including older figures PredictionHero has cited, as provisional. Check the fee shown in your own order ticket before you trade rather than relying on a cached number. Pull current prediction market data rather than a cached figure when you check a fee.

Polymarket US runs a separate, flat-rate fee schedule rather than the category-based one above, consistent with it being a distinct, CFTC-regulated product from the international platform.

How Does Polymarket Resolve a Market?

Most Polymarket markets resolve through UMA's Optimistic Oracle, a third-party dispute-resolution system Polymarket doesn't control directly. A small number of fast-moving "up or down" markets instead resolve automatically from a Chainlink price feed, with no proposal or dispute step at all.

For UMA-resolved markets, anyone can propose the winning outcome by posting a bond, $750 in practice. If nobody disputes it, the market settles about two hours later and the proposer gets the bond back plus a small reward.

If someone disputes the proposal, they post a matching bond and the case restarts with a new proposal. A second dispute escalates to a 24-to-48-hour evidence period, followed by a roughly 48-hour vote among UMA token holders, whose ruling is final. A fully disputed market can take four to six days to pay out.

In the rare case a market's outcome genuinely can't be determined, it settles as "Unknown," and every contract, Yes and No, redeems for $0.50 instead of $1 or $0. Why prediction market odds disagree across platforms often traces back to exactly this kind of resolution-source difference.

Has Polymarket Had Legal Trouble in the US?

Yes, and it's part of why Polymarket's current two-product structure exists. In January 2022, the CFTC settled charges against Blockratize, Inc., the company operating Polymarket, for running an unregistered trading facility for event-based binary options going back to mid-2020. Polymarket paid a $1.4 million penalty, agreed to stop offering non-compliant markets, and wound down service to US persons.

That settlement is the reason Polymarket's international platform has operated largely outside the US retail market since 2022, even as it grew into the largest crypto-native prediction market globally in the years after.

Is Polymarket Regulated, and Can US Traders Use It Directly?

It depends which Polymarket you mean. The international platform, polymarket.com, isn't CFTC-regulated and isn't built for US retail access; that's the product everything above describes.

Polymarket US is a separate, newer product. The CFTC approved it through an Amended Order of Designation in November 2025, built on Polymarket's acquisition of the licensed exchange QCX, and it's been operating since under the same federal framework as Kalshi. As of this writing it's still in a phased rollout: iOS only, sports contracts only, with no Android app or web access yet confirmed live.

For the fuller walkthrough of what that split means for a US-based trader day to day, see our guide on using Polymarket in the US, and our broader look at Polymarket's legitimacy and regulatory record.

Who Owns and Funds Polymarket?

Polymarket has raised capital across several rounds since launching, with Intercontinental Exchange, the parent company of the New York Stock Exchange, investing roughly $600 million at one stage. Earlier backers include Founders Fund, Polychain, and Dragonfly.

Bloomberg reported on August 31, 2026 that venture firm 1789 Capital was leading a new round that would value Polymarket at $21 billion post-money, with 1789 contributing around $300 million. That figure was reported, not confirmed as a closed deal, as of this writing, and it marks a sharp climb from a roughly $9 billion valuation mark reported in October 2025.

Why Do People Use Polymarket?

The honest answer is that Polymarket aggregates the collective judgment of thousands of traders with real money on the line, and that judgment is often faster and more precise than a poll, a pundit, or a headline. When a market shifts five points overnight, something changed: a new filing, a leaked statement, a shift in expected turnout. The price is telling you that before most news coverage catches up.

Journalists use it to track how sentiment is actually moving, not how it's being reported. Researchers use it as a real-time dataset on collective belief. Traders use it to take a position on specific, verifiable outcomes rather than vague price movements.

None of this is betting on sports results for entertainment. It's pricing the probability of a defined event, which is a different thing in both mechanics and intent.

How Does Polymarket Compare to the Other Four Platforms?

Polymarket isn't the only prediction market, and treating it like the only one misses most of the picture. Polymarket carries the broadest event coverage and the deepest liquidity of any crypto-native platform, but four other platforms price the same kinds of events differently, and the differences matter.

Kalshi remains the original, broadest CFTC-regulated exchange, settling in dollars rather than crypto. That accessibility, no wallet or stablecoin setup required, is part of why Kalshi has scaled to lead the industry on raw volume since spring 2026. Polymarket's own CFTC-regulated product, covered above, is newer and still limited to sports contracts during its phased rollout.

Limitless runs on-chain with its own token and focuses heavily on shorter-duration, fast-resolving markets. Predict.Fun is built on BNB Chain and backed by YZi Labs, formerly Binance Labs; collateral sitting in an open position there can earn yield while it's deployed, which attracts traders who think about capital efficiency, not just outcome probability. Opinion was built with macro trading in mind first, Fed decisions, inflation prints, GDP data, with other event categories layered on top.

Checking a market across all five before treating one price as the answer is the whole reason an aggregator like PredictionHero exists. Identical events frequently trade at different implied probabilities on different platforms, and that gap is information too. For the full head-to-head, see our Kalshi vs. Polymarket comparison. That is the case for comparing prediction market data across platforms instead of trusting a single number.

Sources

• Polymarket. "Resolution." docs.polymarket.com
• Baker McKenzie. "US CFTC Issues $1.4 Million Fine Against Crypto Betting Service Polymarket Based on Its Operating Swaps Without Proper Registration." blockchain.bakermckenzie.com
• Bloomberg. "Polymarket Funding Round Led By 1789 Values Firm at $21 Billion," August 31, 2026. bloomberg.com
• PR Newswire. "Polymarket Receives CFTC Approval of Amended Order of Designation, Enabling Intermediated U.S. Market Access." prnewswire.com

PredictionHero aggregates publicly available prediction market data for informational purposes only. This is not financial advice. Prediction markets may not be available in all jurisdictions.