Prediction Market Systems: The Technical Architecture of Polymarket

If you’re building a prediction markets platform like Polymarket — or maybe just doing some research — this post is for you.

We’ll walk through Polymarket architecture, including its hybrid off-chain/on-chain order book, how it manages market conditions with the Conditional Tokens Framework, and how it uses UMA’s optimistic oracle for settlement. This is a straightforward overview of the system’s architecture and mechanics.

So, how does Polymarket work?

Let’s dive into Polymarket — a protocol built around prediction markets or event markets. At its core, Polymarket is a platform where future events are listed — events that might or might not happen. The key idea is that users can try to predict the outcome and potentially earn by being right. And yes, it sounds like on-chain betting, but there are important nuances we’ll cover.

Event Markets and Shares

Polymarket is an event market, which means users can buy and sell shares tied to different events. To put it simply, each event is a yes-or-no question — will something happen or not?

Let’s look at the event example: “Will TikTok be banned again before May?”