What is Polymarket? Complete Guide to Prediction Markets

Polymarket is the world's largest prediction market platform, allowing users to bet on real-world events using cryptocurrency. From election outcomes to sports results, users can trade on virtually any event where there's uncertainty about the outcome. Built on blockchain technology, Polymarket has processed over $3 billion in trading volume and attracts everyone from casual bettors to professional traders seeking to profit from their predictions.

What is Polymarket?

Polymarket is a decentralized prediction market exchange that operates on the Polygon blockchain. Unlike traditional betting platforms or financial exchanges, Polymarket allows users to take positions on the outcomes of real-world events by buying and selling shares that represent "Yes" or "No" outcomes.

Each share costs between $0.01 and $0.99, and if your prediction is correct, your shares are worth $1.00 each when the market resolves. This creates a unique marketplace where prices reflect the collective wisdom of thousands of traders about what's likely to happen.

Founded in 2020, Polymarket has become the go-to platform for traders who want to profit from their knowledge of current events, politics, sports, crypto, and more. The platform gained massive attention during the 2024 US Presidential Election, where it processed over $500 million in trading volume and proved more accurate than traditional polls.

How Does Polymarket Work?

Polymarket operates as a binary prediction market where every event has two possible outcomes: "Yes" or "No." When you believe an event will happen, you buy "Yes" shares. When you believe it won't happen, you buy "No" shares.

Here's a simple example: Imagine there's a market asking "Will Bitcoin hit $100,000 by December 31, 2025?" If Yes shares are trading at $0.65, that means the market believes there's a 65% probability this will happen. If you think Bitcoin will definitely hit $100k, you could buy Yes shares at $0.65 each. If you're right and Bitcoin reaches $100k by the deadline, each of your shares becomes worth $1.00, giving you a $0.35 profit per share (minus fees).

The Trading Mechanism

Polymarket uses an automated market maker (AMM) system to facilitate trades. This means you can always buy or sell shares instantly without waiting for another trader to match your order. The platform's algorithm automatically adjusts prices based on supply and demand.

When many traders buy Yes shares, the price of Yes shares increases and No shares decrease. This price movement reflects changing market sentiment and creates opportunities for skilled traders to profit from identifying mispriced markets.

USDC and Polygon Blockchain Technology

Polymarket operates on the Polygon blockchain and uses USDC (USD Coin) as its native currency. This technical foundation provides several key advantages that make Polymarket superior to traditional betting platforms.

Why Polygon?

Polygon is a Layer 2 scaling solution for Ethereum that offers fast transaction speeds and minimal fees. When you trade on Polymarket, your transactions are processed in seconds rather than minutes, and fees typically cost just pennies instead of the $5-50 fees common on Ethereum mainnet.

This blockchain infrastructure also ensures complete transparency. Every trade, every market resolution, and every transaction is recorded permanently on the blockchain, creating an immutable record that anyone can verify.

Why USDC?

USDC is a stablecoin, meaning each USDC token is backed 1:1 by US dollars held in reserve. This eliminates the volatility risk of using cryptocurrencies like Bitcoin or Ethereum for betting. When you deposit $100 to Polymarket, you receive 100 USDC, and that amount stays stable regardless of crypto market fluctuations.

Types of Markets on Polymarket

Polymarket offers hundreds of active markets across diverse categories, each providing unique trading opportunities.

Political Markets

Political prediction markets are Polymarket's most popular category. Users trade on election outcomes, policy decisions, approval ratings, and political events. During the 2024 election cycle, Polymarket's political markets traded over $2 billion in volume and consistently outperformed traditional polling.

Crypto Markets

Cryptocurrency markets on Polymarket let traders bet on Bitcoin price movements, Ethereum upgrades, altcoin performance, and regulatory developments. These markets attract sophisticated crypto traders who can leverage their industry knowledge for profit.

Sports Markets

Sports betting on Polymarket covers major leagues and events including NFL, NBA, MLB, UFC, and international competitions. Unlike traditional sportsbooks with fixed odds, Polymarket's dynamic pricing creates opportunities for sharp bettors to find value.

Business & Finance

Trade on stock market movements, company earnings, mergers and acquisitions, Fed interest rate decisions, and economic indicators. These markets attract finance professionals and economic analysts.

Pop Culture & Entertainment

From Oscar winners to viral trends, Polymarket creates markets for cultural events. These often-overlooked markets can offer exceptional value for traders with specialized knowledge.

Understanding How Odds Work on Polymarket

Polymarket's pricing system differs from traditional betting odds, but it's actually more intuitive once you understand the basics. For a deeper understanding, check out our guide on how Polymarket odds work.

Share Prices = Probability

On Polymarket, the price of a share directly represents the market's implied probability of that outcome occurring. If Yes shares cost $0.75, the market believes there's a 75% chance the event happens. If No shares cost $0.25, there's an implied 25% chance it doesn't happen. Notice that Yes and No prices always add up to $1.00.

Calculating Potential Profits

Your potential profit is straightforward: ($1.00 - Purchase Price) × Number of Shares. If you buy 100 Yes shares at $0.60 each, you invest $60. If you're correct, those shares become worth $100, giving you a $40 profit (66.7% return). If you're wrong, you lose your $60 investment.

Converting to Traditional Odds

If you're familiar with traditional betting odds, you can convert Polymarket prices: A $0.50 share equals +100 (even money), $0.67 equals -200, and $0.33 equals +200. However, most traders find Polymarket's percentage-based system more intuitive.

How to Get Started on Polymarket

Getting started on Polymarket is straightforward, even if you've never used cryptocurrency before. For a complete walkthrough, see our guide on how to use Polymarket.

Step 1: Create Your Account

Visit Polymarket.com and click "Sign Up." You'll need to connect a crypto wallet like MetaMask or create one through Polymarket's streamlined onboarding. The platform supports email-based wallet creation, making it accessible even for crypto beginners. The entire process takes less than 5 minutes.

Step 2: Fund Your Account

Deposit USDC to your Polymarket wallet. You can purchase USDC directly through the platform using a credit card, bank transfer, or by transferring USDC from another exchange like Coinbase. Minimum deposits typically start at $20, but many traders start with $100-500 to have sufficient capital for diversified trading.

Our step-by-step guide on how to deposit on Polymarket walks through every funding method in detail.

Step 3: Find Markets to Trade

Browse Polymarket's market categories or use the search function to find events you're knowledgeable about. Start with topics you understand well—whether that's politics, sports, crypto, or pop culture. The best traders focus on their areas of expertise rather than betting randomly.

Step 4: Place Your First Trade

Select a market, choose Yes or No, enter the number of shares you want to buy, and confirm the transaction. Start small while you learn the platform mechanics. A good rule of thumb is to risk no more than 2-5% of your bankroll on any single market when you're starting out.

Step 5: Monitor and Manage Your Positions

Track your active positions in the Portfolio section. You can sell shares before the market resolves to lock in profits or cut losses. Active position management separates profitable traders from casual bettors.

Who Uses Polymarket?

Polymarket attracts a diverse user base, each with different goals and trading styles.

Professional Traders and Whales

High-volume traders, often called "whales," place trades worth tens or hundreds of thousands of dollars. These sophisticated traders use advanced analytics, insider knowledge, and rapid reaction to breaking news to generate consistent profits. Their large positions often move markets and create opportunities for smaller traders to follow their strategies.

Casual Bettors

Many users trade on Polymarket for entertainment, placing small bets on events they're interested in. While they may not generate significant profits, they enjoy the engagement and excitement of having "skin in the game" on real-world events.

Researchers and Analysts

Academics, journalists, and political analysts use Polymarket as a real-time sentiment gauge. Because traders risk real money, prediction markets often provide more accurate forecasts than traditional polls or expert opinions.

Hedgers

Some users employ Polymarket to hedge real-world risks. For example, a business owner concerned about a regulatory change might buy Yes shares on a "Will X regulation pass?" market to offset potential business losses.

Why Polymarket is Different from Traditional Betting

Polymarket fundamentally differs from traditional sportsbooks and betting platforms in several important ways.

Peer-to-Peer Trading vs. House Odds

Traditional sportsbooks set odds designed to guarantee them a profit regardless of outcome. On Polymarket, you're trading against other users in a peer-to-peer market. There's no "house" taking a built-in edge. This creates opportunities for skilled traders to find mispriced markets that wouldn't exist on traditional platforms.

Dynamic Pricing

Polymarket prices change constantly based on trading activity and breaking news. You can buy shares at $0.30, sell them at $0.50 an hour later if sentiment shifts, then buy back in at $0.40 if you think the market overreacted. This flexibility is impossible with traditional fixed-odds betting.

Broader Market Diversity

While sportsbooks focus primarily on sports, Polymarket covers virtually any newsworthy event. You can trade on political outcomes, tech company launches, celebrity news, economic data, or geopolitical events—topics that don't have betting markets anywhere else.

Complete Transparency

Every transaction on Polymarket is recorded on the blockchain. You can verify market resolution criteria, track whale trades, and analyze historical price movements. Traditional betting platforms operate as black boxes where you can't see how odds are set or who's betting what.

Polymarket Fees and Costs

Understanding Polymarket's fee structure helps you calculate true profitability and optimize your trading strategy. For complete details, see our Polymarket fees guide.

Trading Fees

Polymarket charges a 2% fee on profits when markets resolve. This means if you win $100, you receive $98. If you lose, there's no additional fee beyond your lost stake. This fee structure is significantly more favorable than traditional sportsbooks, which build 5-10% margins into their odds.

Blockchain Transaction Fees

Because Polymarket operates on Polygon, blockchain fees are minimal—typically less than $0.01 per transaction. Compare this to Ethereum mainnet where a single transaction can cost $5-50 during periods of high network congestion.

Deposit and Withdrawal Fees

Polymarket itself doesn't charge deposit or withdrawal fees, but your payment method might. Credit card purchases of USDC typically incur 2-4% fees from payment processors. Bank transfers and crypto-to-crypto transfers are usually free or very low cost. Plan your funding strategy accordingly—one large deposit is more cost-effective than many small ones.

Is Polymarket Legal?

Polymarket's legal status varies by jurisdiction and has evolved over time. For complete information, see our guide on Polymarket's legal status.

In 2022, Polymarket reached a settlement with the CFTC (Commodity Futures Trading Commission) and agreed to block US-based users from accessing the platform. As a result, Polymarket is currently not available to US residents without using VPNs or other workarounds (which violates the platform's terms of service).

For users outside the United States, Polymarket operates legally in most jurisdictions. However, prediction markets face regulatory uncertainty in many countries, so users should verify local laws before trading.

The platform has stated its intention to eventually re-enter the US market through proper regulatory channels, but no timeline has been announced. US traders can explore legal Polymarket alternatives.

Risks of Trading on Polymarket

Like any form of trading or betting, Polymarket carries risks that every user should understand before depositing funds. Learn more in our guide on Polymarket safety.

Market Risk

Your predictions can be wrong. Even if your analysis is sound, unexpected events can change outcomes. Successful traders win more than they lose, but losses are inevitable. Never risk money you can't afford to lose.

Resolution Risk

Markets are resolved by third-party oracles based on predetermined criteria. Occasionally, resolution criteria can be ambiguous or disputed. Polymarket has a dispute resolution process, but edge cases can create frustration for traders.

Smart Contract Risk

Polymarket operates on blockchain smart contracts. While extensively audited, smart contracts can theoretically contain vulnerabilities. The platform has operated securely since 2020, but this risk exists with any blockchain-based application.

Liquidity Risk

Smaller markets may have limited liquidity, making it difficult to enter or exit large positions without significantly moving prices. Stick to high-volume markets if you're trading substantial amounts.

Conclusion: Is Polymarket Right for You?

Polymarket represents a new paradigm in prediction markets, combining the transparency of blockchain technology with the wisdom of crowds. Whether you're interested in politics, sports, crypto, or current events, Polymarket offers a unique way to profit from your knowledge and analysis.

The platform works best for traders who are willing to do research, manage risk carefully, and continuously learn from their results. If you enjoy analyzing events, understanding probability, and making data-driven decisions, Polymarket can be both profitable and intellectually engaging.

Start small, focus on your areas of expertise, track successful traders, and treat Polymarket as a skill-based activity rather than pure gambling. With the right approach, Polymarket can become a valuable tool for turning your knowledge into profits.