Prediction market operator replaces USDC.e with a proprietary token as part of a broader upgrade to its trading infrastructure and order book design.
Polymarket is introducing its own USDC-backed collateral token, moving away from native stablecoin settlement as it upgrades its exchange infrastructure.
The prediction market platform said on X it will roll out a new collateral asset, “Polymarket USD”, over the coming weeks, replacing the use of USDC.e across its exchange. The token will be backed 1:1 by USDC and integrated into a broader upgrade of the platform’s core trading architecture, including new smart contracts, an updated order book and revised developer tooling.
According to Polymarket, the transition is designed to be largely seamless for most users. The platform’s frontend will automatically handle the conversion process, requiring only a one-time approval. However, users interacting directly via APIs or trading bots will need to manually wrap USDC or USDC.e into the new token using a dedicated onramp contract.
Exchange infrastructure overhaul
The collateral change forms part of a wider update to the platform’s Conditional Token Framework (CTF) exchange, which underpins how prediction markets are created and traded on-chain.
The new version of the exchange contract introduces changes to how orders are structured and matched, as well as support for ERC-1271 signatures, a standard commonly used to enable contract-based account authentication. Polymarket said it has also optimised fee collection and distribution mechanisms and introduced “builder codes” to attribute on-chain order flow to specific integrations.
In parallel, the company is releasing updated software development kits (SDKs) across TypeScript, Python and Go, intended to help external developers and market participants migrate to the new system. Existing integrations will need to update their clients and re-sign orders under the revised format.
As part of the migration, Polymarket confirmed that all existing order books will be cleared, with trading temporarily paused during a scheduled maintenance window. The company said it will provide at least one week’s notice ahead of the upgrade.
Collateral design and liquidity handling
The move away from USDC.e, a bridged version of USD Coin typically used on networks such as Polygon, introduces an additional abstraction layer between users and the underlying stablecoin.
Polymarket USD will act as the primary unit of account and collateral across the platform’s markets, while remaining fully backed by USDC reserves. Users depositing funds will effectively convert their stablecoins into the platform-specific token before trading.
This model mirrors a broader pattern seen across crypto-native trading venues, where platforms introduce internalised tokens to standardise liquidity and streamline settlement within their own environments.
Platform positioning and regulatory backdrop
Founded in 2020, Polymarket operates as a blockchain-based prediction market, allowing users to trade on the outcomes of real-world events using tokenised contracts. Markets have ranged from elections and economic indicators to cultural and sporting events.
The platform’s growth has taken place alongside increased regulatory scrutiny of prediction markets and event-based derivatives. In the US, Polymarket reached a $1.4m settlement with the Commodity Futures Trading Commission (CFTC) in 2022 over allegations it had operated an unregistered derivatives trading platform. As part of the agreement, the company committed to restricting access for US-based users.
Since then, Polymarket has continued to operate primarily outside the US, positioning itself within the decentralised finance ecosystem while maintaining a frontend interface and developer tooling for broader participation.
The introduction of a proprietary collateral token comes at a time when stablecoin usage, tokenised settlement and onchain market infrastructure are drawing closer regulatory attention globally. Authorities in multiple jurisdictions, including the UK and EU, have been advancing frameworks for stablecoins and crypto-asset service providers, with a particular focus on reserve backing, transparency and consumer protections.
Polymarket has not indicated any change to its underlying reserve model for the new token beyond stating that it will be backed 1:1 by USDC. Further technical documentation, including a migration guide and API changelog, is expected ahead of the upgrade’s completion.
