Understanding Polymarket: A Decentralized Marketplace for Real-World Predictions

What Is Polymarket? A New Approach to Forecasting Real-World Events

（Image source：Polymarket）

Polymarket reimagines how people quantify the probability of future events. In place of traditional forecasting tools—such as opinion polling or specialized financial markets—the platform uses blockchain infrastructure to create an open environment where predictions are priced by the collective choices of its participants.

From elections and sports outcomes to geopolitical trends and economic announcements, Polymarket enables users to engage with major global topics by purchasing shares that mirror the market’s perception of each possible result.

A System Built Around Transparency and Permissionless Access

At the core of Polymarket’s design is its decentralized architecture. Every transaction is recorded on-chain, eliminating dependence on centralized custodians or restrictive sign-up processes.

Key characteristics of the system include:

• Users transact with USDC, reducing exposure to crypto volatility.
• All activity is fully auditable on the blockchain.
• Participation requires nothing more than a self-custodial wallet.
• Governance is expected to transition toward a DAO model over time.

With these principles, Polymarket functions as a public data engine where market-driven pricing emerges naturally from collective sentiment.

How Predictions Work: Buying Shares as Probability Signals

Instead of placing a traditional bet, users purchase shares tied to the outcome of a specific event. For instance, if shares for “Candidate X wins” are priced at $0.63, that price reflects a market consensus of a 63% chance that the event will occur.

Once the event concludes:

• Correct predictions settle at $1 USDC per share.
• Incorrect outcomes drop to zero.

This creates a mechanism that resembles both investment and participatory forecasting, turning user activity into a dynamic representation of probability.

The Technical Foundation: Polygon and Smart Contracts

Polymarket operates primarily on the Polygon network, chosen for its low-cost, high-throughput environment—particularly important during periods of heavy trading associated with high-profile events.

Smart contracts automate every stage of user interaction:

• Placing positions
• Exchanging shares
• Distributing settlements
• Recording transactions

Automation ensures that processes remain consistent, tamper-resistant, and free from manual intervention.

User Funds Remain Self-Managed

Funds on Polymarket are never held by the platform. Users maintain control of their USDC through their own wallets, protecting their assets from mismanagement or custodial failures.

This security model relies on:

• Users controlling their private keys
• The platform lacking authority to freeze or transfer user funds
• Encrypted handling of all relevant data

Such a framework aligns with Web3 principles of personal autonomy and privacy.

How Polymarket Generates Revenue

The platform’s business model centers around transaction fees denominated in USDC.

These fees serve several functions, including incentivizing liquidity providers and maintaining robust markets across active events. As trading volume increases—especially during widely followed topics—the platform’s revenue naturally scales.

Conclusion

Polymarket functions as far more than a speculative tool. It operates as a live, market-based indicator of global expectations, built around decentralization, transparent mechanics, and straightforward settlement rules.

By merging blockchain verification with crowd-driven pricing, the platform offers a new way to interpret the likelihood of real-world outcomes—allowing markets, rather than experts, to present a collective view of what the future may hold.

Disclaimer:

This is not investment advice. This information is provided for informational purposes only and should not be construed as a recommendation to buy, sell, or hold any asset. Cryptocurrency trading involves a risk of loss. Gate US services may be restricted in certain jurisdictions. For more information, please see our legal disclosures: https://us.gate.com/legal/disclosures