Explainer · prediction
What is Polymarket?
What is Polymarket?
Polymarket is a decentralized prediction market platform where users trade event contracts on the outcomes of real-world events — from elections and economic data releases to sports results and geopolitical developments. Launched in 2020 by Shayne Coplan and operated by Polymarket Labs, the platform runs on the Polygon blockchain and settles all positions in USDC, a USD-pegged stablecoin. As of May 2026, Polymarket is blocked for US-based users following a 2022 settlement with the Commodity Futures Trading Commission (CFTC), and competes with centralized alternatives such as Kalshi and PredictIt.
How Polymarket Works
Polymarket operates as an order-book exchange where users buy and sell binary event contracts priced between $0.01 and $1.00. A contract priced at $0.65 implies a 65% market probability of the event occurring. If correct, the position pays out $1.00 USDC at settlement; if incorrect, it pays $0.00.
Key mechanics as of May 2026:
- Blockchain: Polygon (a Layer-2 Ethereum network)
- Settlement currency: USDC
- Wallet requirement: Non-custodial wallet (e.g., MetaMask or Magic.link email login)
- Fees: 2% on winnings at settlement; no trading fees on most markets
Scale and Volume
Polymarket is the largest decentralized prediction market by cumulative trading volume. During the November 2024 US presidential election cycle, the platform processed over $3.5 billion in total trading volume on election-related contracts alone — a figure that drew widespread media coverage and mainstream attention. As of early 2025, monthly active traders on the platform numbered in the hundreds of thousands globally.
The CFTC Settlement and US Restrictions
In January 2022, Polymarket reached a $1.4 million settlement with the CFTC, which ruled that the platform had been offering illegal off-exchange event contracts to US residents. Since January 2022, Polymarket has geo-blocked US IP addresses and requires users to confirm they are not US persons during onboarding. US residents who attempt to access the platform via VPN do so in violation of the platform's terms of service.
What Can You Trade on Polymarket?
As of May 2026, active market categories include:
- Politics — elections, legislative outcomes, approval ratings
- Economics — Federal Reserve rate decisions, inflation data releases, GDP figures
- Science and technology — AI model releases, space launch outcomes
- Sports — championship winners, season records
- Geopolitics — conflict developments, diplomatic agreements
Each market is resolved by a decentralized dispute system using the UMA Protocol as its oracle, which verifies real-world outcomes and triggers USDC payouts.
Polymarket vs. Competitors
| Feature | Polymarket | Kalshi | PredictIt |
|---|---|---|---|
| Regulation | CFTC-settled (2022) | CFTC-licensed (2021) | CFTC no-action letter |
| US access | Blocked since Jan 2022 | Available | Available (capped) |
| Settlement | USDC on Polygon | USD | USD |
| Decentralized | Yes | No | No |
FAQ
Is Polymarket legal in the US? As of May 2026, Polymarket is not available to US residents following a January 2022 CFTC enforcement settlement. US persons are geo-blocked and prohibited by the platform's terms of service from participating.
Is Polymarket safe to use? Polymarket smart contracts have been audited, and funds are held in non-custodial wallets rather than on a centralized exchange, reducing counterparty risk. However, users bear smart contract risk and the risk of disputed market resolutions, which are settled by the UMA oracle protocol.
How does Polymarket make money? As of May 2026, Polymarket charges a 2% fee on winnings at market settlement. There are no fees charged during the buying or selling of positions on most markets.
What happened to Polymarket in 2024? The November 2024 US presidential election generated over $3.5 billion in trading volume on Polymarket, making it the highest-volume prediction market event in the platform's history and attracting coverage from outlets including the Financial Times and Reuters.
Can I use Polymarket with a VPN? Using a VPN to circumvent Polymarket's US geo-block violates the platform's terms of service. Additionally, US persons participating in Polymarket markets may face legal exposure under CFTC regulations regardless of technical access methods.
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