Polymarket launches Protocol V2 canary markets

Polymarket has begun running production canary markets on Protocol V2, a rebuilt smart-contract architecture intended to replace the Gnosis-based Conditional Tokens Framework used for new markets since the platform’s early years. The test phase is scheduled to run through Oct. 30, with Polymarket tentatively planning to route all net-new markets to V2 from Nov. 2, according to a Monday announcement from protocol lead Rajath Alex.

The migration would leave existing markets on the legacy system while directing newly created markets to the new contracts. That approach avoids forcing holders of open positions through a contract migration during a live market’s lifecycle, while allowing Polymarket to test the new infrastructure under production conditions before making it the default for future listings.

Protocol V2 consolidates functions that had accumulated across multiple contracts as Polymarket added market formats. Its central component is a single ERC-1155 positions contract, which will represent market positions under the new design. ERC-1155 is a token standard that can manage multiple token types through one contract, a structure suited to markets where traders may hold positions across numerous outcomes.

The revised system also uses pUSD as collateral, adds one exchange for each market type, and introduces a router to direct activity through the appropriate exchange. Alex said the redesign is meant to reduce the number of contract layers that developed over time, potentially simplifying how markets are created, traded, and settled.

Four market formats will launch first

Polymarket plans to begin the V2 rollout with four market types: Binary, Atomic Neg-risk, Incremental Neg-risk, and Combinatorial.

Binary markets are the platform’s most familiar format, offering contracts tied to two outcomes. The other three types reflect structures designed to handle related outcomes and more complex market relationships, where the probability assigned to one result can affect the pricing of another.

The “neg-risk” label refers to markets with mutually exclusive outcomes, such as a set of contracts covering possible winners of a single election or award. In such markets, a trader holding several outcome positions should not be exposed as though every outcome could occur simultaneously. Protocol-level handling of those relationships can affect how collateral is managed and how positions are combined or redeemed.

Combinatorial markets could extend the system to contracts involving linked outcomes, though Polymarket’s announcement did not detail which specific market combinations it expects to offer first. Launching the initial version with four defined market types gives the platform a narrower production scope than attempting to migrate every possible market design at once.

Oracle system is designed for several data sources

Protocol V2 adds an OracleAggregator intended to connect Polymarket’s resolution process to UMA, Chainlink, and potentially other data sources. Oracles are services that bring external facts onchain, allowing smart contracts to determine whether a market’s outcome conditions were met.

The aggregator creates a route for Polymarket to use different resolution mechanisms rather than tying all markets to a single oracle design. That could be useful for a platform listing markets based on varied source material, from official election tallies to economic releases or sports results.

The announcement does not indicate that every market will use multiple oracle providers simultaneously. Instead, the architecture appears designed to support multiple resolution sources within a shared framework. The practical challenge will be ensuring that each market’s terms, source hierarchy, and dispute process remain clear to traders before positions are opened.

Polymarket also said V2 includes provisions for moving positions, collateral, and market resolutions across chains. The company plans to activate those capabilities when it expands beyond its current network. Cross-chain support would allow the protocol to carry a market’s core state between blockchain environments rather than treating each network as a separate venue with isolated liquidity.

Legacy positions will remain on the older framework

Open positions in existing Polymarket markets will continue to operate on the legacy Conditional Tokens Framework. The split is operationally conservative: markets already trading under established rules and contracts can proceed to resolution without being moved into a new system midstream.

For users, the immediate practical effect is that newly created V2 markets and older markets may exist under different contract systems for a period. Traders participating in both will need to recognize which framework supports a particular market, especially as the platform introduces the new collateral and exchange flow for V2 listings.

The approach also means the Nov. 2 target applies to net-new markets rather than the entire platform’s historical market inventory. A gradual replacement limits migration risk but leaves Polymarket maintaining two systems until legacy markets resolve and wind down.

Security reviews accompany the launch

Polymarket said Protocol V2’s code was audited by Cantina, Certora, Quantstamp, SigmaPrime, Zellic, and Pashov. The company also said Certora formally verified the code, a process that uses mathematical methods to test whether specified contract properties hold under defined conditions.

Audits and formal verification can identify classes of coding flaws before deployment, though they do not eliminate operational risks arising from market configuration, oracle disputes, or user interaction. Polymarket said its bug bounty offers rewards of up to $5 million for critical findings, creating an additional incentive for independent security researchers to examine the deployed system.

Alongside the contract overhaul, Polymarket is rolling out Data API V2, described as a Rust service built around an in-house onchain indexer. A dedicated indexer can make blockchain activity easier for applications to query, reducing reliance on raw chain data for market information such as prices, orders, positions, and resolutions.

The technical rollout comes during a period of expansion for the company. Alex joined Polymarket in May, and the platform later hired Travis VanderZanden as chief growth officer. VanderZanden founded Bird and previously held executive roles at Uber and Lyft.

Bloomberg also reported that Polymarket has been in discussions to raise $1 billion at a $21 billion post-money valuation, with venture firm 1789 Capital expected to contribute roughly $300 million. Against that backdrop, Protocol V2 gives Polymarket a new foundation for future market creation while preserving the existing contracts that remain active on its original framework.