Polymarket has begun production testing for its new prediction market architecture, Protocol V2. Testing will take place from October 5 to October 30 on a limited number of real markets.

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

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

This update replaces the previous architecture based on the Conditional Tokens Framework (CTF) introduced by Gnosis in 2019. Rajath Alex, head of the protocol at Polymarket, described V2 as a reconstruction of the system that focuses on "position tokens and above."

Polymarket Moves Away from Adapter Frameworks

Historically, Polymarket was built on the versatile Gnosis CTF. As new market types and features emerged, the platform incorporated individual contracts and adapters to manage markets with multiple mutually exclusive outcomes (neg-risk), trading, and outcome resolution.

According to Alex, while this model allowed for scalability, each new product layer added complexity to the architecture. Protocol V2 aims to unify core components into a cohesive modular system.

The central feature will be the ERC-1155 PositionManager contract, which keeps track of positions. Each token ID encodes information about the module, condition, and outcome directly within the ID. The official documentation states that this approach allows for determining relationships between positions without additional calls to the contract storage.

The overall Exchange will manage order matching, while user operations will be routed through a Router. The architecture also includes specialized routers for migrating older CTF positions and cross-network operations.

Architecture diagram of Protocol V2. Source: GitHub Polymarket.

Modules for Various Market Types

The market logic has been extracted from the PositionManager into separate modules. Initially, the system will support combinatorial, binary markets, as well as markets with multiple mutually exclusive outcomes:

  • The CombinatorialModule allows for positions whose outcomes depend on combinations of several underlying outcomes;
  • The BinaryModule is responsible for standard markets with "Yes" and "No" outcomes;
  • The NegRiskModule combines several mutually exclusive conditions within a single event, where if one option is resolved as YES, the others are automatically considered losers.

These modules utilize a shared infrastructure for positions and collateral while maintaining their own market logic. The BinaryModule and NegRiskModule receive results through the resolution system, while the CombinatorialModule calculates payouts based on the outcomes of the included basic positions.

Among the upcoming features currently in research and development are Scalar Resolution and Directional Collateral Return.

pUSD as Unified Collateral

The sole collateral asset for Protocol V2 will be Polymarket USD (pUSD), introduced during the exchange infrastructure update in April. According to the documentation, pUSD is an ERC-20 token backed 1:1 by USDC or USDC.e, which are stored in a separate vault.

When splitting a position, the collateral is burned in exchange for outcome tokens, and when merging or redeeming positions, pUSD is issued back.

Protocol V2 also facilitates cross-network movement of collateral, resolution results, and positions for binary and neg-risk markets. This is achieved using a bridge based on Chainlink CCIP. However, combinatorial positions cannot be transferred directly between networks—they must be reassembled on the target network.

Market Resolution

An OracleAggregator will be responsible for delivering market results. This allows for the integration of various resolution mechanisms through specialized modules. The architecture is designed to work with UMA, Chainlink, and other result sources.

Contracts in V2 are built on upgradable UUPS proxies, allowing for the modification of specific implementations through a governance process without needing to redeploy the entire system.

The codebase has been audited by Cantina, Certora, Quantstamp, SigmaPrime, Zellic, and Pashov Audit Group, with Certora conducting formal verification. The maximum reward for critical vulnerabilities in the bug bounty program is $5 million.

Old Positions Will Not Migrate Automatically

The migration will occur in phases. The period from October 5 to 30 is designated for system testing and preparation for developers and market makers. Regular users of the application and website will not require a separate technical migration.

Existing positions based on CTF will not be automatically converted to V2 following the switch to new markets. However, the codebase includes a mechanism to facilitate the transfer of old Conditional Tokens and NegRiskAdapter positions to the new system.

Starting November 2, Polymarket plans to create all new markets using Protocol V2.

In parallel, the platform has introduced Data API V2—a Rust-based service operating on the company’s own on-chain indexer. The new version supports Protocol V2 data, standardizes response formats, and utilizes pagination by pointer instead of offset. This approach allows for receiving continuous streams of trades and activity even with new entries appearing between requests.

In April, Polymarket announced CTF Exchange V2, featuring a new order matching mechanism and pUSD. The company described the update as "the most significant infrastructure change since launch," aimed at providing "faster trade execution, lower fees, and a robust foundation for future development."

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