Polymarket is replacing the smart contracts that have powered its prediction markets since launch. On Monday, Head of Protocol Rajath Alex introduced Polymarket Protocol V2 on X, describing it as a rebuild starting from the position token upward.
A small batch of canary markets began trading in production on V2 that same day and will remain live through Oct. 30, Alex wrote. Polymarket has tentatively scheduled Nov. 2 as the date when new markets will move to the new system.
Why Polymarket rebuilt the protocol
Alex said Polymarket’s current contract stack was never designed for what the platform eventually became. The system was originally built on the Conditional Tokens Framework, general-purpose code released by Gnosis in 2019.
As Polymarket added new market types, each one required its own contract layer in front of that framework, according to Alex. That included an adapter for pUSD collateral, a wrapped-collateral token for neg-risk markets, a second exchange, and a separate UMA adapter for each market type.
Alex wrote that the setup worked and carried Polymarket to its current scale. But each new feature added another layer, another approval for users, another contract for integrators, and another deployed component that could no longer be changed.
What changes in Protocol V2
V2 consolidates that structure into a single ERC-1155 contract for positions, with pUSD as the sole collateral asset, one exchange across all market types, and one router.
Position IDs now encode the market type, the market itself, and the outcome, allowing the protocol to identify a position without extra lookups.
Four market modules are included at launch:
- binary
- atomic neg-risk
- incremental neg-risk
- combinatorial
The new version also adds an OracleAggregator for resolution. It can connect to UMA, Chainlink, and future oracle networks.
The contracts are built to support bridging positions, collateral, and resolutions to other chains as well. Polymarket said it plans to turn that on when it expands beyond a single network.
The system can be upgraded through a governance process. Alex also listed scalar resolution and directional collateral return as follow-on features that are still in development.
Audits, formal verification, and bug bounty
Alex said the code was audited by Cantina, Certora, Quantstamp, Sigma Prime, Zellic, and Pashov Audit Group. Certora also formally verified the system.
A bug bounty offers rewards of up to $5 million for critical findings.
Migration plan for users, developers, and market makers
For people using the app or website, Polymarket’s migration guide says, 「No technical migration is required」, beyond accepting approval prompts.
The guide also says positions already held under the old framework will not be converted.
Developers and market makers are being given a four-week canary period to integrate, with weekly office hours during that window.
Data API V2 released alongside the rebuild
Polymarket also launched Data API V2, a Rust service running on the company’s in-house onchain indexer.
Follows Polymarket’s April collateral overhaul
The rebuild comes after Polymarket’s April overhaul, when it replaced bridged USDC.e on Polygon with pUSD. The company described pUSD as its own collateral token, redeemable 1:1 for Circle’s USDC.
Alex wrote, 「It’s been a labor of love for the team, and it’s the base we’ll be building on for a long time.」