Polymarket: The Prediction Market That Beat the Polls

Why Polymarket Success Matters for Web3

Polymarket demonstrated that blockchain-based prediction markets can provide more accurate forecasts than traditional polling—and created a blueprint for building the next generation of information markets.

With $3.7 billion in trading volume during the 2024 election, Polymarket proved that crypto markets can deliver real utility beyond speculation.

• Blockchain enables real utility $3.7B volume proves people use crypto for non-speculative purposes
• Stablecoins solve volatility USDC made Polymarket accessible to non-crypto users
• Layer 2s enable consumer apps Polygon's low fees made frequent trading viable
• Decentralization provides value No central authority controlling markets builds trust
• Crypto beats TradFi Prediction markets more accurate than legacy polling

What We Build

How Prediction Markets Work

1. Markets are created Events with binary outcomes (Yes/No questions) become tradeable markets.
2. Users buy shares Traders buy Yes or No shares representing their prediction.
3. Prices reflect probability A Yes share at $0.65 means 65% probability according to the crowd.
4. Markets resolve When the outcome is determined, winners receive $1 per share, losers get $0.

Development Timeline

Building Your Own Polymarket: Key Components

Core technical components required for a prediction market platform. These snippets illustrate the fundamental architecture patterns.

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

contract ConditionalTokens {
    mapping(bytes32 => bool) public resolved;
    mapping(bytes32 => mapping(address => uint256)) public positions;

    function splitPosition(
        bytes32 marketId,
        uint256 amount
    ) external {
        // Split collateral into Yes/No positions
        positions[keccak256(abi.encode(marketId, "YES"))][msg.sender] += amount;
        positions[keccak256(abi.encode(marketId, "NO"))][msg.sender] += amount;
    }

    function redeemPosition(bytes32 marketId) external {
        require(resolved[marketId], "Market not resolved");
        // Redeem winning positions for collateral
    }
}

export class AMMMarketMaker {
  private liquidity: Map<string, { yes: bigint; no: bigint }>;

  calculatePrice(marketId: string, outcome: 'YES' | 'NO'): number {
    const pool = this.liquidity.get(marketId);
    if (!pool) throw new Error('Market not found');

    // Constant product formula (x * y = k)
    const k = pool.yes * pool.no;
    const price = Number(pool.no) / (Number(pool.yes) + Number(pool.no));

    return outcome === 'YES' ? price : 1 - price;
  }

  swap(marketId: string, outcome: 'YES' | 'NO', amount: bigint) {
    // Update pools based on swap
    // Calculate slippage
    // Return new price
  }
}

import { UMA } from '@uma/sdk';

export async function resolveMarket(
  marketId: string,
  question: string,
  timestamp: number
) {
  const uma = new UMA(provider);

  // Request price from UMA oracle
  const request = await uma.requestPrice({
    identifier: "YES_OR_NO_QUERY",
    timestamp,
    ancillaryData: question,
  });

  // Wait for dispute period
  await uma.waitForResolution(request.requestId);

  // Get final answer (0 = No, 1 = Yes)
  const resolution = await uma.getSettledPrice(request.requestId);

  return resolution === 1n ? 'YES' : 'NO';
}

Need order book matching, market making algorithms, or regulatory compliance infrastructure? We build production-ready prediction market platforms with all the components you need.

Market Opportunities Beyond Elections

FAQ