Prediction Markets Explained
A prediction market is a type of exchange where people trade contracts based on the outcome of future events. Instead of buying stocks in a company, you buy shares that pay out $1.00 if an event happens — or $0.00 if it doesn't.
The price of these shares reflects the market's collective belief about the probability of the event. If a YES share is trading at $0.70, the market estimates a 70% chance the event will occur.
How Polymarket Works
Polymarket is built on the Polygon blockchain and uses USDC (a stablecoin pegged to the US dollar) as its base currency. Here's the core mechanics:
- 1Binary outcomes
Every market has a YES and NO outcome. Shares are priced between $0.00 and $1.00.
- 2Full collateralisation
Every pair of YES + NO shares is backed by exactly $1.00 USDC. This means the system is always solvent.
- 3Order book trading
Polymarket uses a Central Limit Order Book (CLOB) — the same system used by major stock exchanges. You can place market orders and limit orders.
- 4Resolution
When the event concludes, winning shares pay out $1.00 and losing shares pay out $0.00. Resolution is handled by UMA's oracle system.
Example
A market asks: "Will BTC close above $100,000 at 3:00 PM UTC?"
- YES at $0.60 — Market thinks 60% chance BTC will be above $100k. If correct, you profit $0.40 per share (67% return).
- NO at $0.40 — Market thinks 40% chance BTC will be below $100k. If correct, you profit $0.60 per share (150% return).
What Can You Trade?
Polymarket hosts markets across a wide range of categories. On Polyblock, we focus on crypto price prediction markets — fast-resolving markets on BTC, ETH, SOL, and XRP price movements. Learn more in our guide to Polymarket crypto markets.
Bitcoin (BTC)
Trade 5-minute (BTC only), 15-minute and 1-hour predictions on Bitcoin price movements. The most liquid and popular markets.
Ethereum (ETH)
Predict whether ETH will close above or below key price levels within short timeframes.
Solana (SOL)
Fast-moving SOL markets with high volatility — ideal for traders who thrive on momentum.
Ripple (XRP)
Trade XRP prediction markets with competitive spreads and real-time orderbook data.
Why Trade Prediction Markets?
- Defined risk — Your maximum loss is always the price you paid for shares. No liquidations, no margin calls.
- Short timeframes — 5-minute (BTC only), 15-minute and 1-hour markets mean fast resolution and quick compounding of profits.
- Transparent pricing — Prices are set by the market via an open order book — no market maker manipulation.
- Low barrier to entry — Start trading with as little as $1. No minimum account size required.
- Earn without trading — Create automated strategies on Polyblock and earn fees from subscribers — no capital required. Learn more about <InfoInternalLink href="/info/tools/polymarket-automation">Polymarket automation</InfoInternalLink>.
Polymarket vs Traditional Trading
Prediction markets offer several advantages over traditional crypto trading:
No Liquidation Risk
Unlike leveraged crypto trading, prediction markets have a fixed max loss. You can never lose more than you invested.
Clear Payoff Structure
Every trade has a binary outcome — either $1.00 or $0.00. No complex PnL calculations or funding rates.
Time-Bounded
Markets resolve at a specific time. No need to manage open positions indefinitely or worry about overnight risk.
Information Edge
If you have strong conviction about short-term price movements, prediction markets let you express that view with clear odds.
Getting Started with Polymarket
The easiest way to start trading on Polymarket is through Polyblock. We provide a professional trading terminal with features you won't find on Polymarket's native interface:
- Custodial wallets — No MetaMask needed. We manage your wallet for instant, gas-free trading.
- Real-time orderbook — Live WebSocket streaming of every bid, ask, and trade.
- AI Auto Trader — Automated trading that executes strategies 24/7 based on your parameters.
- Playground — Build automated strategies with AI. No coding required.