How to develop a platform like Polymarket?

If you want to build a cryptocurrency-based prediction market like Polymarket, you’ve come to the right place. In this complete guide, we’ll cover all you need to know to develop a platform like Polymarket, starting with how modern prediction markets work, technical architecture, smart contract design, compliance considerations, development steps, and how to launch a secure, scalable, and regulation-ready product.

What is Polymarket?

Polymarket is a platform built around prediction markets, sometimes also known as event markets. These types of markets have gained immense popularity in recent years, with Polymarket in the lead. They gained traction since the U.S. Presidential election last year, when users placed bets on the chances of Donald Trump Vs Kamala Harris winning the race. 

Polymarket’s growth and industry validation were highlighted in 2025 when ICE announced a strategic investment in Polymarket, signaling broader institutional interest in blockchain-based prediction markets.

In simple terms, event contracts allow people to speculate on the outcome of a question using a prediction-market app interface. This question can range from who wins an election to whether interest rates will rise, or even which team wins a sports match. Understanding this core concept is essential if you’re exploring how to build an app like Polymarket.

How does Polymarket work?

Like every prediction market, this one has two outcomes, YES and NO, and their prices reflect what traders collectively believe will happen. 

In the above example, YES shares are trading at 99.4¢, while NO shares are just 0.7¢. Since both shares must add up to around $1, this implies that people think that there is a very high likelihood, around 99%, that Polymarkets U.S. will go live by the end of 2025. This pricing mechanism is central to how prediction market apps calculate probabilities.

When YES is priced near $1, it means people think the outcome is almost certain. When an event resolves on December 31, 2025, YES shares will be worth $1 if Polymarket launches, and NO shares will be worth zero. If the launch doesn’t happen, the payouts change: NO becomes $1, and YES collapses.

However, traders don’t need to wait until the end. They can adjust their positions as sentiment changes. Let’s see what happens if a user buys $100 worth of YES shares at the current price of 99.4¢. That gives them roughly 100.6 YES shares. If Polymarket does go live in the U.S. by the end of the year, those shares will each settle at $1, leaving the user with around $100.60. If the launch doesn’t happen, those YES shares settle at $0, and the user loses the entire $100. 

What really differentiates Polymarket from other prediction platforms is its blockchain-rooted technology. Unlike traditional prediction platforms such as Kalshi, which operates as a regulated U.S. exchange, or PredictIt, which runs under academic no-action relief, Polymarket is built directly on blockchain infrastructure, an important distinction for teams evaluating how to build an app like Polymarket versus building a centralized alternative.

The platform runs on the Polygon network, where smart contracts handle trading, settlement, and payouts automatically, eliminating the need for intermediaries. All markets are denominated in USDC, a dollar-pegged stablecoin used on Polygon. So, every trade and final payout happens in a currency designed to hold a stable 1:1 value with the U.S. dollar. 

Polymarket uses a central limit order book (CLOB), meaning all buy and sell orders for a given event are collected in one place. This makes it easy for traders to see real-time supply and demand. Polymarket’s version of an order book is hybrid-decentralised, blending off-chain and on-chain components. Polymarket’s backend tracks incoming orders, matches them, and prepares the execution data. A smart contract verifies that data, executes the trades, interacts with the underlying YES/NO contracts, and settles everything in USDC. 

Key Features of a Platform Like Polymarket

Let’s look at some of the key features of a platform like Polymarket:-

1. User Registration & Onboarding

A user should be able to sign up quickly and start trading with minimal friction. Depending on the region, platforms may also require identity verification (KYC) to comply with local regulations. On platforms like Polymarket, this means supporting both crypto‐native users (via Web3 wallets) and less-crypto-savvy users (via email/magic-link or fiat on-ramp). Good onboarding typically has a wallet setup or fiat-to-crypto gateway, linking a funding method, and a simple interface to view or deposit collateral (USDC). 

2. Wallet Integration (Web3 + fiat gateways)

Polymarket integrates with Web3 wallets and uses proxy wallet abstraction to simplify user onboarding. Users interact with USDC on Polygon, sign orders using EIP-712, and manage allowances for settlement, ensuring that, despite the hybrid off-chain/on-chain architecture, users always retain cryptographic control over their assets.

3. Market Creation Module

A platform like Polymarket needs a flexible framework to create new event markets, where each market defines a clear question, its possible outcomes (YES/NO), the resolution conditions, and the collateral type used for trading. In Polymarket, the collateral type is USDC on Polygon. Polymarket’s architecture supports a wide range of event types because each market is backed by on-chain outcome tokens and a defined resolution source that determines how the event will settle. However, unlike some permissionless prediction markets, Polymarket does not allow users to directly create and list their own markets. Instead, users can submit market ideas, and their team reviews and launches approved markets.

4. Outcome Tokenization

Let’s say a user places a limit order to buy 100 YES shares at $0.40. The system automatically displays the mirrored side of that order, a sell order for 100 NO shares at $0.60. The original order doesn’t change; the inversion simply reflects the probability rule that YES and NO prices must always add up to $1.

This is possible because every market is built from two on-chain outcome tokens: YES and NO. When a new event market is created, Polymarket mints a pair of these mutually exclusive tokens using a conditional-token format. Each pair is fully collateralized with USDC on Polygon, so every YES/NO share corresponds to a real on-chain asset.

5. Trading Engine

Polymarket uses a central limit order book (CLOB), rather than a traditional AMM, for many markets today. This means that user trades are matched off-chain, orders are collected in a central book, and trades settle on-chain via smart contracts. The orderbook model allows users to place limit orders or market orders, giving them more control over price and execution. Previously, Polymarket relied on an AMM for some markets, but as liquidity and volume grew, they shifted to an orderbook to support larger trades and liquidity pools.

6. Oracle & Event Resolution System

Since outcome markets resolve based on real-world events, a reliable resolution mechanism is crucial. 

Polymarket’s architecture supports on-chain settlement triggered by verified results, either via oracles, data feeds, or trust-minimized adjudication systems. This ensures that once the event outcome is known, the correct outcome token (YES or NO) automatically redeems to USDC, and the incorrect token becomes worthless. 

In markets that use UMA as the resolver, the platform relies on a decentralized optimistic oracle. When a new market is created, it is assigned a questionId, the number of outcomes, and the UMA oracle address. A resolution request is triggered at creation, indicating that the market requires an eventual outcome. Anyone can later propose a result by posting a bond (currently $750). If no one disputes the proposal within two hours, it is accepted. If a dispute is raised, also with a bond, UMA tokenholders vote to determine the correct outcome. Once finalized, the oracle reports the result on-chain, after which token holders can redeem their positions in the Conditional Tokens Framework (CTF). Winning outcome tokens redeem USDC from the collateral pool, and losing tokens redeem nothing.

7. Real-time Price Updates

Because Polymarket uses a CLOB matched off-chain but settled on-chain, users can see the full order book for each event, lending transparency into current market sentiment and supply-demand dynamics. Traders can track order depth, spreads, and volume in real-time. This visibility informs smart trading decisions, whether to speculate or hedge. 

8. Settlement & Payout Engine

Once an event resolves, Polymarket’s smart contracts handle settlement automatically. The winning outcome tokens are redeemed for USDC, and the losing tokens become worthless. Because settlement is on-chain, it benefits from blockchain properties like transparency, immutability, and atomicity. Even though orders are matched off-chain, the smart contract guarantees their final execution and payout.

9. Admin Dashboard & Moderation Tools

For a real-world platform, it's critical to have moderation and administration capabilities, especially since markets bet on real events. The hybrid on-chain/off-chain model implies there is an off-chain operator managing the order-book, user onboarding, and order matching. The dashboard needs to manage markets, control listing, enforce rules, and monitor order validity. This means that the admin design must also include safeguards: orders must be signed, allowances verified, and orders continuously validated to prevent abuse. 

10. Security, Encryption & Auditing

Polymarket relies on smart contracts for settlement; these are audited and designed to ensure secure transactions. The CLOB Exchange contract has been audited by third parties. Because the matching logic happens off-chain but settlement happens on-chain, the system combines the efficiency of centralized order matching with the security guarantees of blockchain settlement. Orders must be signed (e.g., via EIP-712), allowances must be set, and all trades follow strict validity and cancellation rules to prevent fraud.

How Developers Can Build a Platform That Stands Apart from Polymarket

While Polymarket sets a strong benchmark for on-chain prediction markets, developers today have far more creative room to design platforms that cater to broader audiences. For instance, Polymarket’s model can be refined by adding social, gamified, and community-driven features that make forecasting feel more engaging rather than purely financial. Instead of expecting users to sift through dozens of market tickers, the platform can incorporate personalized feeds, market categories tailored to user interests, and mobile-first UI patterns. Features such as leaderboards, badges, referral incentives, prediction streaks, and XP systems can transform what is solely a transactional activity into a habit-forming journey. 

For developers, the takeaway is clear: you don’t need to compete with Polymarket on mechanics. Instead, differentiate through user experience, community design, content breadth, and social interaction models. Add layers that resonate with non-crypto audiences, such as private groups, friend challenges, curated discovery pages, and mobile-native flows. By designing for emotion, not just financial speculation, you can build a platform that is more inclusive and engaging.

You can learn more about Daffodil’s approach to custom software development here.

How to build a Polymarket Clone

Let’s look at a step-by-step breakdown of how to develop a platform like Polymarket. These steps closely mirror the real-world process behind building an app like Polymarket.

Step1: Define Requirements & Perform Market Research

Every prediction market begins with clarity on whom it is built for and what events users will care about. Market research involves mapping the categories your platform will support and understanding the motivations behind user engagement. For example, traders may participate to get returns, while companies may use the platform to aggregate probability data.

Step 2: Prototype the UI/UX

Prediction markets attract both crypto users and newcomers. This makes intuitive UX non-negotiable. Wireframes and prototypes define how users will discover markets, place trades, review their portfolios, and interpret probability trends. An intuitive layout reduces friction, especially for a first-time user.

Step 3: Develop a Smart Contract Module

A smart contract layer forms the basis of a platform like Polymarket. It handles outcome-token minting, escrow management, settlement logic, fee distribution, and event lifecycle management. The underlying blockchain, whether Ethereum, Polygon, Solana, or BSC, shapes your scalable architecture.

Most platforms adopt a binary YES/NO token design where each pair is fully collateralized. Smart contracts also enforce rules that govern how markets are created, how collateral is held, and how redemption happens post-resolution. Once an oracle posts the result, contracts must redeem winning tokens and nullify losing ones.

Step 4: Integrate the Backend and Trading Engine Integration

A prediction market is a real-time trading system, which means the backend must initiate order flow, manage user positions, enforce business rules, and expose high-performance APIs. While Polymarket uses a hybrid-decentralized Central Limit Order Book (CLOB), platforms can choose between a CLOB or an Automated Market Maker (AMM) depending on liquidity strategy, regulatory constraints, and product vision. The backend must also manage data ingestion, event metadata, wallet linking, authentication, and compliance workflows. 

Step 5: Setting Up Oracle 

Oracles join blockchain logic with real-world outcomes. A system like Polymarket may use Chainlink for structured feeds or UMA’s optimistic oracle for more subjective events. Platforms also need a dispute mechanism so users can request a review if an outcome appears incorrect. 

Step 6: Implement Frontend

The frontend team converts prototypes into a fully functional interface using React or Next.js. The frontend must support dynamic updates, responsive charts, real-time price movement, wallet connections, and frictionless interaction flow.

Step 7: Test Thoroughly Across Smart Contracts, Backend, and UI

Testing a prediction market is complex because it involves smart contracts, off-chain engines, chain interactions, and real-time systems. Teams must test: smart contract logic under various edge cases, blockchain interactions, and real-time updates under peak traffic.

Step 8: Launch a Beta and get User Feedback

A controlled beta release validates assumptions and refines UX. Early adopters provide critical insights into how they interpret market data, which features feel most valuable, and what friction points prevent them from making trades.

Step 9: Deploy to Maintenance 

Once it's validated, the platform moves into full-scale deployment. This includes hardening the infrastructure for security, adding regulatory and KYC workflows, implementing monitoring systems, and establishing a continuous update pipeline. 

In practice, many teams adapt Polymarket’s base mechanics to fit tighter regulatory, UX, and business constraints. For example, we recently delivered a Prediction Market Platform Development for a US-Based Emerging Startup by combining Polymarket-inspired market logic with enterprise-grade controls and compliance-ready architecture.

Tech Stack needed to build a Polymarket Clone

Building a Polymarket-style prediction platform requires a carefully chosen tech stack that supports real-time trading, secure on-chain settlement, and seamless user interaction. Below is an overview of the core technologies needed to develop a scalable and production-ready Polymarket clone.

• Blockchain Network:
  • Ethereum for low-cost, high-speed settlement.
• Smart Contracts:
  • Written in Solidity, implementing market creation, YES/NO token minting, collateral management, and automated settlement.
  • Optional use of the Conditional Tokens Framework (CTF) for binary markets.
    
• Oracles & Event Resolution:
  • Chainlink, UMA’s optimistic oracle, or a custom oracle for delivering verified real-world outcomes.
  • Includes dispute windows, bonding mechanisms, and final settlement reporting.
    
• Off-Chain Backend & Trading Engine:
  • Node.js or Python to handle user accounts, off-chain order matching (CLOB model), trade validation, notifications, and analytics.
  • REST or GraphQL APIs bridge frontend, backend, and on-chain operations.
    
• Real-Time Infrastructure:
  • WebSockets, Redis Pub/Sub, or Kafka for streaming price updates, orderbook depth, and market movements.
    
• Databases & Storage:
  • MongoDB or PostgreSQL for user data, trade history, portfolios, and event metadata.
  • IPFS when decentralized content storage is required.
    
• Frontend:
  • React, Next.js, Angular, or Vue for a responsive, high-performance UI.
  • Real-time charts, market lists, and orderbook visualizations.
    
• Wallet & Payments Integration:
  • MetaMask, WalletConnect, Coinbase Wallet, or Trust Wallet for Web3 users.
  • Optional fiat on-ramp via Stripe, Circle, or custodial partners if targeting non-crypto users.
    
• Security & DevOps:
  
  • CI/CD pipelines, Kubernetes or Docker deployments, and monitoring with tools like Grafana and Sentry.
  • Audited smart contracts, EIP-712 signatures, and strict allowance rules.
    

Technical Architecture: Core Developer Guidance

Building a platform like Polymarket requires a modular, scalable architecture that balances performance, transparency, and security. The system includes:-

• a user interface,
• an off-chain trading engine, 
• a real-time communication layer, and
• on-chain smart contracts that guarantee settlement. 

Frontend Frameworks & Web3 Integration: The user interface is typically built using React, which simplifies rendering, routing, and component reuse. They also support integration with Web3 wallet providers such as MetaMask, WalletConnect, and Coinbase Wallet. The frontend can incorporate a custodial or fiat on-ramp partner, allowing users without crypto wallets to participate while still settling trades on-chain.

Backend API & Order-Matching Interface: The API layer is built with Node.js and TypeScript, handling authentication, user profiles, compliance checks, and order validation while interfacing with the order-matching engine. GraphQL is used for fast, low-latency access to price data and orderbook depth, and REST APIs handle transactional calls such as trade execution and position updates.

Real-Time Communication Layer: A real-time communication layer provides live price updates, trade confirmations, and resolution notices. WebSockets enable two-way communication with users, while Redis Pub/Sub or Kafka distribute real-time data across backend services to keep orderbooks and market feeds synchronized.

Matching Engine & On-Chain Settlement: A Polymarket-style platform typically uses a Central Limit Order Book (CLOB), matching trades off-chain for speed and settling them on-chain for transparency. Settlement contracts run on Polygon, with all collateral held in USDC, a stablecoin that maintains a reliable 1:1 peg with the U.S. dollar.

Oracle Framework for Outcome Resolution: Since market outcomes originate off-chain, platforms rely on oracles like Chainlink for structured data or UMA’s optimistic oracle for subjective events. UMA allows anyone to propose an outcome by bonding funds. Proposals that are not challenged are accepted, while disputed ones go to a tokenholder vote. Once finalized, the oracle posts the result on-chain. This enables settlement contracts to redeem winning tokens and invalidate losing ones.

Database & Storage Architecture: The data layer uses PostgreSQL for relational data, TimescaleDB for time-series trading activity, and Redis for caching hot data such as orderbook snapshots. For enterprise-scale deployments, CockroachDB offers globally distributed, horizontally scalable storage.

Infrastructure, Deployment & Monitoring: Platforms generally run on Kubernetes (AWS or GCP) to support autoscaling, high availability, and container orchestration. Monitoring tools like Prometheus and Grafana provide system visibility, while Sentry captures application-level exceptions across frontend and backend.

Choosing Between Orderbook and AMM Architectures: Orderbooks support complex order types, tighter pricing, lower slippage, and easier regulatory integration. AMMs are simpler to deploy but require more collateral and often produce less efficient prices.

Why Prediction Market Platforms Fail or Succeed

Prediction markets have existed for decades, but only some have succeeded. What makes a platform succeed? It comes down to how well a platform balances user trust, market integrity, liquidity, and usability. Technical and regulatory choices are also at play. 

Research shows that platforms succeed when they act like financial exchanges, with transparent rules, reliable pricing, and credible settlement. Polymarket is a case in point. Its binary YES/NO market design is easy to understand, its orderbook delivers efficient price discovery, and its on-chain settlement model ensures funds cannot be manipulated. In fact, Polymarket has become so widely adopted that major media outlets now cite their predictions with traditional polls. 

Early prediction platforms often failed because they tried to list overly complex markets, leading to less participation and distorted prices. Polymarket narrowed the scope to high-interest, high-volume events. 

Polymarket also succeeded by evolving its technical stack. Early prediction markets relied heavily on algorithmic AMM pricing, which made liquidity expensive and sometimes produced unintuitive price swings. Polymarket’s transition to a hybrid central limit orderbook improved execution quality, attracted sophisticated traders, and created deeper market depth. 

However, even the best of platforms face challenges. Studies published in Fortune and Columbia University highlight the risk of wash trading and artificially inflated volumes if safeguards aren’t implemented. Ensuring transparent data, verifying participant behavior, and designing friction against manipulation are essential for long-term use of the platform.

Regulatory problems have also caused several platforms to shut down. Operators that treated prediction markets like gambling products often ran into enforcement barriers. Polymarket’s recent regulatory gain shows how regulatory alignment can shift a platform from the sidelines toward mainstream legitimacy.

How Polymarket Makes Money

Here’s a snapshot of how Polymarket makes money: 

• Transaction Fees
  Polymarket charges a small fee, around 1% per trade, on every buy or sell order executed on the platform. Since users trade YES/NO shares frequently, these micro-fees compound into a steady revenue stream.
  
  
• Market Creation Fees
  To prevent low-quality event listings, Polymarket charges a fee for creating new markets. This filters out frivolous entries, covers administrative overhead, and generates additional revenue as demand grows for diverse market topics.
  
  
• Liquidity Provider Revenue Share
  Liquidity providers ensure tradable markets. Polymarket may retain a small portion of LP-generated profits from the markets it supports. This model encourages liquidity provision, which boosts trading volume and platform revenue.
  
  
• Data Monetization Opportunities
  Shifts in sentiment, probability movements, and volume patterns create valuable predictive analytics. Polymarket monetizes anonymized market data by offering insights to hedge funds, researchers, media outlets, and companies interested in forecasting trends.
  
  
• DeFi Integrations & Yield Mechanisms
  Polymarket can support staking, collateral optimization, and liquidity mining, potentially earning yield on collateral pools. This strengthens liquidity while adding new revenue channels.
  
  
• Premium Features & Advanced Tools
  Polymarket can introduce paid tiers offering advanced analytics, priority market creation, API access, or enhanced trading tools for power users.
  
  
• User Incentive Loops That Increase Revenue Indirectly
  Gamified rewards, streak bonuses, prediction badges, or engagement incentives help increase daily activity. More active users generate more trades, which increases fee-based revenue. 

Conclusion

Prediction markets are transitioning from niche crypto experiments to mainstream forecasting tools. Polymarket’s rise shows what’s possible when powerful incentives, transparent blockchain settlement, real-time trading infrastructure, and intuitive market design come together. Building a platform like Polymarket requires deep domain knowledge in Web3 engineering, real-time systems, oracles, orderbook architecture and security.

Ready to Build Your Own Prediction Market Platform?

Daffodil Software has extensive experience developing large-scale Web3, fintech, and real-time trading applications, including next-generation prediction market platforms. If you’re exploring how to develop a platform like Polymarket, we’d be happy to help. Contact Daffodil today for a free consultation.