Polymarket changes an essential part of its crypto infrastructure. The platform deploys Protocol V2, a new architecture of smart contracts intended to gradually replace a system based on code
Polymarket changes an essential part of its crypto infrastructure. The platform deploys Protocol V2, a new architecture of smart contracts intended to gradually replace a system based on code dating back to 2019. pUSD becomes the sole collateral, several types of markets will be able to operate on the same exchange, and a future expansion beyond Polygon is already planned. Initial tests are underway.
The change comes as Polymarket experiences considerable activity. A Galaxy study has just analyzed 2.9 million retail accounts on the platform, of which 69.2% ended in loss.
Behind these millions of users, the technical architecture was starting to age. The current system relies on code developed in 2019. Adding new types of markets still requires deploying additional contracts.
Protocol V2 aims to reduce this complexity. The new version uses a single contract to manage the tokens representing positions and an exchange capable of supporting multiple categories of markets.
Polymarket also adopts pUSD as the sole collateral. Introduced in a previous upgrade in April, this token is guaranteed 1 to 1 by Circle’s USDC. Users therefore continue to work with a dollar-linked asset, but through a layer specific to Polymarket. For now, only a few markets use V2. The true switch is yet to come.
Polymarket currently operates on Polygon, the network that processes its transactions and on which pUSD is issued. This activity has sometimes weighed heavily on the network’s statistics. In February, Polymarket notably helped push Polygon’s fees above those of Ethereum.
Protocol V2 now prepares for broader operation. The new architecture is designed to allow the transfer of positions, collateral, and market outcome data between multiple blockchains.
However, Polymarket has not announced which networks are involved nor the date of any potential cross-chain launch. Expansion beyond Polygon remains thus a capability planned in the architecture, not yet an available product.
Another change: smart contracts become upgradeable. Polymarket will be able to modify them through a secure governance process, instead of having to multiply new contracts for each feature.
A system called OracleAggregator should also enable connecting different oracles. UMA and Chainlink are among the solutions planned to determine market results. Technically simpler. But also easier to evolve.
Polymarket avoids a brutal migration. Currently open positions will remain on Protocol V1. They will not be converted to the new infrastructure. For users of the app or site, no major technical handling is planned. Some may simply need to authorize new smart contracts once they start trading on V2 markets.
Security also occupied a large part of the work. The new contracts have been audited by Cantina, Quantstamp, and Zellic. Certora carried out a formal verification. Polymarket simultaneously offers up to $5 million in rewards for a critical vulnerability discovered in the protocol.
The schedule remains gradual. Real-world tests must continue until October 30. Polymarket then tentatively aims for November 2 to start creating new markets directly on V2.
This redesign comes as the platform continues to grow despite a complicated regulatory situation in several countries. In France, Polymarket remains notably blocked after a decision by the National Gaming Authority. Protocol V2 does not address this issue. It mainly prepares the machine for what’s next: more types of markets, simpler infrastructure, and eventually multiple blockchains.
