Polymarket Protocol V2 Replaces 2019 Framework Behind Its Markets

• Polymarket has started running a limited set of markets on Protocol V2 contracts.
• New markets are tentatively scheduled to use the new protocol from November 2.
• Existing markets stay on the legacy contracts and will not be migrated at once.
• The rebuild replaces a 2019 framework with one position contract and a modular oracle layer.

Polymarket announced Protocol V2 on October 5, a ground-up rewrite of the smart contracts that hold user positions, collateral and market outcomes on the largest crypto-based prediction market. Head of Protocol Rajath Alex said a limited number of “canary” markets, meaning small live markets used to expose faults before a wider release, are already running on the new contracts, with testing planned through October 30. If that period passes without incident, newly created markets will tentatively start on Protocol V2 from November 2, according to The Block. The change matters because the platform has processed between $4.6 billion and $11.3 billion in monthly volume this year on infrastructure that was never built for that load.

Introducing Polymarket Protocol V2 https://t.co/FDzaZyiPnl

— Rajath Alex (@0xrajath) October 5, 2026

A 2019 Gnosis toolkit has been carrying $11 billion months

Polymarket has run on the Conditional Tokens Framework, a general-purpose toolkit that Gnosis released in 2019. It handled simple yes-or-no questions well. As the company added more complex products, including negative-risk markets (multi-outcome events in which only one result can win), each one required its own adapters, wrapped assets and exchange contracts layered on top of the original base. Alex described the current contracts as essentially never designed for what the platform became.

Protocol V2, in his words, rebuilds the system “from the position token up.” The initial release supports four market structures: Binary, Atomic Neg-risk, Incremental Neg-risk and Combinatorial.

One ERC-1155 contract now reads a position straight from its ID

The core of the redesign is a single ERC-1155 contract, a token standard that lets one contract manage many different token types at once. Every position on the platform, regardless of market type, will live there. Polymarket also changed how positions are labelled: a V2 position ID encodes the market type, the market and the outcome, so the protocol reads what a token represents directly from its ID instead of querying several other contracts.

Around that contract sit a unified exchange, a common router and pUSD as the shared collateral. pUSD is not new. Polymarket introduced it on April 28 alongside an upgraded exchange, and its documentation describes it as an ERC-20 token on Polygon backed 1:1 by USDC, with the backing enforced by smart contracts. Users still deposit, trade and withdraw as before.

Polymarket’s 2026 rebuild, stage by stage April 28 Completed CTF Exchange V2 and pUSD collateral deployed on Polygon October 5 Live now Protocol V2 announced, canary markets running in production October 30 Planned Scheduled end of the canary testing period November 2 Tentative Newly created markets begin using Protocol V2; existing markets stay on legacy contracts

UMA and Chainlink become interchangeable, which opens the door to CPI-style markets

Every prediction market depends on an oracle, the mechanism that supplies the real-world result used to settle it. Protocol V2 adds an OracleAggregator that separates markets from any single resolution system. UMA and Chainlink are connected at launch, and the design allows other providers to be added.

That separation is what makes later products possible. Polymarket says the architecture supports scalar resolution, where a market settles on a value within a range (the December CPI reading, for example) instead of a yes or no. Directional collateral return is also in development. Neither is active at launch. The same applies to cross-chain functions: V2 contains the structure for bridging positions, collateral and resolutions beyond Polygon, but Polymarket has not switched it on.

Gas fell by 6% to 37% in April, but nobody has benchmarked V2 yet

No benchmarks exist yet for Protocol V2 itself. The closest reference is the open-source documentation for the April exchange upgrade, which compares gas use (the network fee paid to execute a transaction) between the old and new order-matching code.

Gas used per order match: old exchange vs April upgrade Complementary, 1 maker-35% 207,402 to 134,594 Complementary, 5 makers-25% 411,423 to 308,940 Complementary, 10 makers-21% 666,818 to 527,180 Complementary, 20 makers-18% 1,178,855 to 964,688 Mint, 1 maker-6% 297,631 to 278,853 Mint, 5 makers-37% 724,982 to 458,937 Grey track = gas used by the old exchange. Colored bar = gas used after the April upgrade. Source: Polymarket CTF Exchange V2 documentation.

The figures come from Polymarket’s own snapshot tests using standard wallet signatures and no fees. They describe the earlier CTF Exchange V2 code, not the protocol announced this week.

Data infrastructure is changing in parallel. Polymarket is releasing Data API V2, written in Rust on top of its own on-chain indexer, covering trades, portfolios, open interest, holders, price history and resolutions. Its documentation says the public routes require no API key. A Polymarket developer reported that the in-house indexer sees on-chain events up to 14 blocks, or about 28 seconds, earlier than the previous setup.

Six auditors, one formal proof and a $5 million price on critical bugs

Cantina, Certora, Quantstamp, Sigma Prime, Zellic and Pashov audited the new contracts, The Block reported. Certora also carried out formal verification, a method that mathematically checks whether code satisfies defined properties instead of relying only on test cases. Polymarket has set a bug bounty of up to $5 million for critical vulnerabilities.

Polymarket swaps its contracts after volume dropped 59% from June

Monthly trading volume reached about $11.3 billion in June, according to DeFi Rate data, and has fallen since: $8.6 billion in July, $5 billion in August and $4.6 billion in September. Open interest stood near $329.9 million on October 2. Polymarket is therefore replacing its core contracts during a quieter stretch, when a fault in a canary market affects less capital.

Polymarket monthly trading volume, 2026

Jan

$7.7B

Feb

$7.9B

Mar

$10.6B

Apr

$9.0B

May

$7.3B

Jun

$11.3B

Jul

$8.6B

Aug

$5.0B

Sep

$4.6B

Green = yearly high. Red = yearly low. Approximate figures. Source: DeFi Rate.

The ownership picture has changed as well. Intercontinental Exchange, owner of the New York Stock Exchange, invested $1 billion in October 2025 and completed a further $600 million cash investment in March 2026. In January 2022 the CFTC fined Polymarket $1.4 million for offering unregistered event contracts; in July 2025 the company bought QCEX, a CFTC-licensed exchange and clearinghouse, for $112 million, and the regulator now lists Polymarket US as a designated contract market.

Old positions stay put: what actually moves on November 2

Only markets created after the switch will use Protocol V2. Open positions on existing markets remain on the legacy contracts until those markets resolve, so both systems will run side by side for months. Traders should see no difference in deposits or withdrawals. Developers and market makers face the larger adjustment, since position IDs, routing and data endpoints all change.

Rivals are building at the same time. The CFTC’s list of designated contract markets now includes ProphetX, Water Street Labs and Xchange Alpha alongside Kalshi and Polymarket US, and Robinhood distributes event contracts to its brokerage customers.

New York and the FCA still dispute which events can be traded at all

Regulators have not settled which events may be traded. New York has challenged prediction-market operators over sports contracts it considers gambling under state law, and a comment filed with the CFTC this year cited six newly created Polymarket accounts that allegedly made about $1.2 million on the timing of US strikes against Iran. In the UK, the FCA said this week it is in contact with Polymarket and Kalshi while it reviews how such products fit with its restrictions on retail binary options.

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