What process is behind Polymarket?

Polymarket's decentralized prediction market platform utilizes blockchain technology to ensure transparent event outcome resolution and foster trust among users.

Feb 09, 2025 at 12:30 am

What process is behind Polymarket?

Polymarket is a decentralized prediction market platform that allows users to speculate on future events without the need for a broker.
Polymarket's platform is designed to create a more trustworthy environment for prediction markets by using blockchain technology to record the formation and resolution of events and the outcomes of market predictions.

Key Points

• The Polymarket platform is a decentralized application built on the Polygon network.
• Polymarket question authors submit event questions to the Polymarket interface, along with the contract terms for potential outcomes.
• Polymarket enforces question authors to lock collateral in $USDC equal to 10% of the question's determined notional value.
• Polymarket question authors also choose a "Settlement Oracle" that has exclusive power to resolve event questions.
• Polymarket operates as a market maker for all event outcome markets that it lists while simultaneously minimizing any risk Polymarket incurs from incorrect event outcomes.

Process

1. Event Question Submission

The process begins with the submission of an event question. Event questions are typically submitted by Polymarket users or third-party developers and should be phrased in a way that allows for a binary yes/no outcome.

2. Event Resolution

Once an event has occurred that corresponds to an event question, a Settlement Oracle is selected to resolve the question. Settlement Oracles are third-party entities that have been designated by the event question author to have exclusive authority to resolve the event question.

3. Settlement

Following the determination of the event outcome, Polymarket settles the market. This involves distributing winnings to those who correctly predicted the outcome and deducting losses from those who predicted incorrectly.

FAQs

• What are the fees associated with Polymarket?

  • Polymarket charges a 0.5% fee on all trades. This fee is used to cover the costs of operating the platform and rewarding Settlement Oracles.

• How does Polymarket ensure the accuracy of event outcomes?

  • Polymarket relies on Settlement Oracles to determine the outcomes of event questions. Settlement Oracles are third-party entities that are responsible for gathering and verifying information about events.

• What is the role of Polymarket in the event outcome resolution process?

  • Polymarket enforces question authors to lock collateral equal to 10% of the question's determined notional value prior to the question being listed. This ensures question authors are incentivized to create high-quality event questions and select reputable Settlement Oracles.