Key facts
- Polymarket has unveiled Protocol V2, a rewrite of its prediction market smart contracts.
- The upgrade replaces stacked adapter contracts with a single ERC-1155 position contract called PositionManager.
- pUSD will be the sole collateral for V2 markets, wrapping USDC and USDC.e at a 1:1 ratio.
- The new system uses an OracleAggregator with Chainlink and UMA as initial sources for market resolution.
- A tentative November 2 deadline is set for new markets to move to the V2 system.
- Existing markets will remain on the older Gnosis Conditional Tokens Framework (CTF) code.
Polymarket, a prediction market platform, has launched Protocol V2, a comprehensive rewrite of its underlying smart contracts. Announced by Head of Protocol Rajath Alex on October 5, the upgrade aims to simplify the platform's architecture and improve its performance.
The new V2 system replaces the previous stacked adapter contracts, which were built on the Gnosis Conditional Tokens Framework (CTF) since 2019, with a single ERC-1155 position contract named PositionManager. This consolidation means fewer moving parts for users and market makers, reducing integration costs and potential points of failure.
Polymarket's recent CFTC order to operate as a U.S. exchange necessitated an upgrade to its settlement infrastructure, as the 2019 stack could no longer keep pace with the platform's growth and high-stakes nature.
The upgrade also introduces pUSD as the sole collateral for V2 markets, which will wrap USDC and USDC.e at a 1:1 ratio. A unified exchange contract and router will handle all market types, further reducing friction. On the oracle side, an OracleAggregator will support pluggable resolution, with Chainlink and UMA as the initial sources. Chainlink has already settled over $7 billion in Polymarket volume, and UMA will handle optimistic resolution.
Canary markets are currently live, running from October 5 to October 30. The Data API v1 will be retired on October 24, requiring developers to migrate to the new Rust-based Data API v2. The tentative cutover date for net-new markets to the V2 system is November 2. Existing markets, positions, and balances on the CTF will not be affected, as V2 operates on a separate ledger.
The timing of the V2 launch is strategic, coinciding with Kalshi's CFTC approval for S&P 500 perpetual futures. Polymarket's V2 aims to attract institutional market makers by offering a unified collateral layer and a single router, a move to counter Kalshi's growing market share. While Polymarket's 24-hour volume is $12.3 million compared to Kalshi's $17.6 million, V2 is designed to help close this gap.
However, the CFTC's probe into Polymarket remains unresolved. The split liquidity between old and new markets during the transition window poses a risk, and the November 2 date is tentative. The V2 upgrade could also reshape how macro contracts are traded, potentially tightening spreads on high-stakes contracts due to faster oracle resolution and lower integration costs.