Chapter 33 of 33
Terms organized by theme
Here is a quick map of how the terms group together. Skim the group you care about first. Then jump to the letter in the A-Z list below.
| Category | Example terms | Where you meet them |
|---|---|---|
| Market structure | CLOB, maker/taker, bid/ask, spread, depth | Every trade page, the order book panel. |
| Resolution | UMA, MOOV2, Optimistic Oracle, DVM, Chainlink feed | After a market closes and before payout. |
| Multi-outcome | NegRisk, conditional token, basket, sum-over-$1 | Election fields, World Cup winners, any multi-branch market. |
| Strategy & sizing | Kelly Criterion, EV, base rate, calibration, edge | Position-sizing guides, any quantitative playbook. |
| Risk & compliance | Proxy wallet, KYC, DCM, CFTC, restricted jurisdiction | Account setup, country-access pages, withdrawals. |
| Rewards | Maker rebate, LP pool, 3-minute rule, scoring multiplier | Liquidity-rewards dashboard and any two-sided quoting. |
The Short Version
Polymarket has its own vocabulary, like any specialist market. One trade can pull in words from five worlds at once. You get traditional trading (bid, ask, slippage), DeFi (Polygon, USDC, proxy wallet), and prediction markets (Yes/No, resolution, conditional tokens). You also get decentralised oracles (UMA, MOOV2, DVM, bond) and derivatives (perps, funding rate, liquidation). This glossary defines every term you need, in plain English. Each entry links to the guide that covers it in depth. Over 120 entries, sorted A-Z. Bookmark it.
What you'll learn
- 100+ Polymarket trading terms defined in plain English
- Key abbreviations: CLOB, UMA, EV, GTC, FOK, KYC, DCM, NegRisk
- How CLOB orders, NegRisk markets, and UMA disputes actually work
- When each term applies and which guide covers it in depth
A
Arbitrage: window durations collapsed from 12.3s (2024) to 2.7s (2026). 73% of arbitrage profits captured by sub-100ms bots - a reference point, not a retail opportunity.
Adverse Selection - When traders who know more than you pick off your resting limit orders. It is the main risk you face as a market maker. See Liquidity Rewards.
APScheduler - A Python library that bot builders use to run tasks on a timer. For example, it can rescan markets every 5 minutes.
Arbitrage - Buying low in one market and selling high in another to lock in a profit. On Polymarket these windows now last only seconds, and bots win most of them. See Advanced Strategies.
Ask (Offer) - The lowest price anyone is willing to sell shares for right now.
Atomic Settlement - A trade where both sides clear at the same moment on-chain. No one can back out halfway through.
B
Backtest - Testing a strategy on past data to guess how it would do in future. Polymarket's Data API lets you backtest down to single trades.
Base Rate - How often an event has happened in the past. Start here, then adjust for today's news. See Probability Thinking.
Basis - The gap between two related prices, like a perp vs its spot, or an April BTC market vs a June one. A basis trade tries to capture that gap.
Bid - The highest price anyone is willing to buy shares for right now.
Binary Market - A market with just two outcomes: Yes or No. It is the most common type on Polymarket.
Bond (UMA) - A $750 USDC deposit you put up to propose or dispute a result through the UMA Oracle. You lose it if your side loses. See UMA Disputes.
Bridge - A service that moves crypto between blockchains, like USDC from Ethereum to Polygon. Polymarket deposits use the Polygon PoS bridge.
C
CLOB structure: bids stack below midpoint, asks above. Makers rest orders to earn rebates; takers cross the spread and pay fees.
Calibration - How well your probability calls match what actually happens. If you are well calibrated, your "70%" calls come true about 70% of the time.
Catalyst - An event that moves a price, planned or not. Think a Fed meeting, election night, a drug approval, or a Super Bowl kickoff.
CFTC - Commodity Futures Trading Commission. It is the US regulator for commodity derivatives, and now for prediction-market contracts too.
Chainlink Data Streams - A price oracle that updates in under a second and is cryptographically checked. Polymarket uses it for crypto price-target markets. See Crypto Trading.
CLOB - Central Limit Order Book. The engine that pairs buyers with sellers. Orders sit on the book, sorted by price. See Order Book Guide.
CLV (Closing Line Value) - Whether you got in at a better price than where the market closed. Positive CLV over many trades is a strong sign you have edge.
Condition ID - The unique ID for a market in the Gamma API. You must map it to token IDs before you can trade. See API Guide.
Conditional Token Framework (CTF) - The Gnosis standard on Ethereum and Polygon. It turns prediction-market shares into ERC-1155 tokens.
Cost Basis - The price you paid for your shares. It drives your capital gain or loss at tax time. See Tax Guide.
Cross-Margin - When one pool of margin backs all your open positions at once, rather than one pool per position. It applies to perps.
D
DCM - Designated Contract Market. The CFTC status that lets Polymarket run legally in the US, gained through the QCEX deal.
Delta - How much your profit or loss moves when the underlying thing moves. A 50-cent share has about 0.5 delta to the outcome's probability.
Depth - How many dollars sit at each price level in the book. It tells you how much you can trade before you push the price.
Dispute (UMA) - A challenge to a proposed result. It costs a $750 bond, and if you win the dispute you take the proposer's bond. See UMA Disputes.
Dune Analytics - An on-chain analytics site you query with SQL. It hosts many community-built Polymarket dashboards. See Tools & Resources.
DVM - Data Verification Mechanism. UMA's full token-holder vote, used when a dispute escalates. It takes 48-96 hours to resolve.
Dynamic Fee - Polymarket's taker fee that changes with the price. The fee is highest near 50c and drops toward 0c and 100c.
E
Edge - Your probability estimate minus the market price. Positive edge means you think the market is mispriced in your favour.
EIP-712 - An Ethereum standard for signing structured data. The py-clob-client uses it to sign your Polymarket orders.
EV (Expected Value) - Your average profit if you made the same bet many times. The formula is (chance of winning × profit) minus (chance of losing × loss).
F
FAK (Fill And Kill) - An order that fills whatever it can right now at your limit price, then cancels the rest. It works like a capped market order.
Favorite-Longshot Bias - The tendency for long-shots to be priced too high and favorites too low. It shows up in every prediction market.
FOK (Fill or Kill) - An order that fills in full right now or cancels. It is all-or-nothing, which helps when you trade arbitrage legs.
Funder Address - Your proxy wallet address. You set it in the py-clob-client funder parameter.
Funding Rate - In perpetual futures, a regular payment between longs and shorts that keeps the perp price near spot. It is usually around ±0.01% every 8 hours. See Perpetual Futures.
G
Gamma API - Polymarket's API for finding markets. It returns markets, prices, volume, and metadata, and needs no login.
Gas - The fee the blockchain charges to run your transaction. On Polygon it is usually pennies; on Ethereum mainnet it can be much higher.
GTC (Good Till Cancelled) - The default order type. It rests on the book until it fills or you cancel it.
GTD (Good Till Date) - An order that cancels itself at a time you set.
H
Half-Life (Information) - How long it takes for the price effect of news to fade by half. On Polymarket that is about 4 hours for typical news.
Hedge - A second position that cuts your loss if the first one goes wrong. A good hedge is rarely dollar-for-dollar. See Advanced Strategies.
Heuristic - A mental shortcut for guessing a probability fast. For example, "incumbent presidents are favored in a strong economy."
I
Implied Probability - The share price read as a chance. A $0.65 share means a 65% implied probability.
Implied Volatility - How big a price swing the option or ladder-market prices expect. Short-dated crypto markets on Polymarket effectively price this in.
Informed Flow - Trades from people with an edge in information, like insiders, analysts, or faster news feeds. Whale trackers try to spot it.
K
Quarter-Kelly captures most of the growth with drawdowns that retail psychology can actually survive - the professional default.
Kelly Criterion - A formula for the best share of your bankroll to bet, given your edge. Full-Kelly swings too hard, so quarter-Kelly is the pro standard. See Position Sizing.
KYC - Know Your Customer. The ID check you pass for deposits, bigger volumes, and US DCM access.
L
Ladder Market - A set of linked markets at rising thresholds. For example, BTC above $100K, $110K, or $120K by a date.
Limit Order - An order at a price you set. It fills at that price or better, pays 0% fees, and earns maker rebates.
Liquidation - In perps, when the platform force-closes your leveraged position because losses ate through your maintenance margin. See Perpetual Futures.
Liquidity - How easily you can buy or sell without moving the price. More liquidity means tighter spreads and less slippage.
Liquidity Rewards - Polymarket pays market makers rebates from a ~$5M+/month general pool, plus a separate $5M+/month sports pool. See Liquidity Rewards.
Long - A position that wins if the outcome is Yes, or if the tracked asset rises in perps.
M
MOOV2 whitelist: 37 → 177 addresses (Aug 2025 - Apr 2026). Post-launch: 59% fewer bad proposals, 68% fewer disputes.
Maker - A trader whose limit order rests on the book and adds liquidity. A maker pays 0% fee and earns a rebate.
Maker Rebate - 20-25% of taker fees paid back to makers as a reward for adding liquidity.
Margin - The collateral you post to open or hold a leveraged position in perps.
Market Maker - A trader who always quotes both sides, a bid and an ask, to earn the spread and rebates.
Market Order - An order that fills right away at the best price available. It pays a taker fee of 0.75-1.80% depending on the category.
Mean Reversion - When a price that ran too far snaps back toward fair value. On Polymarket, ~60% of that snap-back happens within 90-120 minutes of a news event.
Mention Market - A market that resolves on how often a word is said in a speech or event. For example, "How many times will the Fed chair say 'inflation'?" See Science & Tech Trading.
Midpoint - The price exactly between the best bid and best ask. It is the reference point for liquidity rewards.
MOOV2 - Managed Optimistic Oracle V2. A UMA upgrade from August 2025 that limits result proposals to whitelisted addresses. Since launch there are 59% fewer bad proposals and 68% fewer disputes. The whitelist grew from 37 to 177 addresses through 2025-2026.
Multi-Outcome Market - A market with 3 or more outcomes, like an Oscar winner, an election, or a race. See Multi-Outcome Guide.
N
NegRisk: ~9.5x capital efficiency vs raw CTF. Lets retail-sized bankrolls trade multi-outcome basis setups that otherwise require institutional capital.
NegRisk - The mechanism for multi-outcome markets that knows only one outcome can win. That lets it cut the collateral you must post. It is ~9.5x more capital-efficient than raw CTF.
NegRisk Adapter - The smart contract that wraps separate Yes/No CTF positions into one capital-efficient multi-outcome position.
Nonce - A counter added to each signed order to block replay attacks. The py-clob-client handles nonces for you.
Notional - The full dollar size of a leveraged position. You get it by multiplying margin by the leverage.
O
Optimistic Oracle (UMA) - UMA's default way to resolve a market. The proposed answer counts as correct unless someone disputes it within 2 hours. It is fast when the answer is obvious.
Oracle - A system that brings real-world outcomes on-chain so smart contracts can use them. Polymarket uses UMA and Chainlink.
Order Book - Every pending buy and sell order, sorted by price. See Order Book Guide.
Outcome Token - A share that stands for one outcome. It pays $1.00 if correct and $0.00 if not.
Overreaction - When a price moves more than the news warrants. It is the setup for fade strategies.
P
Perps launched April 21, 2026: BTC, NVDA, Gold up to 10x - 24/7 NVDA is unique to Polymarket.
Perpetual Futures (Perps) - Leveraged bets with no expiry date that run nonstop. Polymarket launched them on April 21, 2026 with BTC, NVDA, and Gold at up to 10x. See Perpetual Futures.
Polygon - The Ethereum Layer-2 chain where Polymarket trades settle. It has low fees and fast confirmations.
Position - What you currently hold: your shares, your side, and your cost basis.
POLY_PROXY - Signature type 1 in py-clob-client. It is the standard setting for retail proxy-wallet users.
Probability - Your estimate of how likely an event is. On Polymarket, the share price in dollars roughly equals it (0.65 = 65%).
Proposer - The address that submits a result through UMA. After MOOV2, only whitelisted proposers are allowed.
Proxy Wallet - A Gnosis Safe-style wallet that places trades for your main wallet. Your private key never signs trades directly.
pUSD - Polymarket's internal collateral token, backed by USDC.
Q
QCEX - A CFTC-licensed exchange that Polymarket bought in July 2025 for $112M to re-enter the US market.
Quarter-Kelly - One-fourth of the bet size the Kelly Criterion suggests. It is the standard pro way to size.
R
Rebate - A payment the exchange gives makers for adding liquidity. On Polymarket it is 20-25% of taker fees.
Resolution - Deciding and settling a market's outcome. UMA, Chainlink, or the Polymarket team can do it.
Resolution Source - The trusted source used to settle a market. For example, AP, Fox, or NBC for US elections, and the BLS for CPI data.
Retry-After - An HTTP header sent with a 429 rate-limit response. It tells you when to try again.
S
Section 1256 - A US tax code section that gives certain regulated futures a 60/40 long-term/short-term split on capital gains. It can apply to Polymarket perps.
Share - One unit of a prediction-market position. It pays $1.00 if correct and $0.00 if not.
Short - A position that wins if the outcome is No, or if the tracked asset falls in perps.
Signature Type - A py-clob-client setting. 0 means a direct wallet; 1 means POLY_PROXY, the standard for retail.
Slippage - The gap between the price you expected and the price you got. It gets worse in thin books or with large orders.
Spoofing - Placing big orders you plan to cancel, to fake liquidity. It is manipulative and banned.
Spread - The best ask minus the best bid. A tighter spread means more liquid.
Stake - The dollar amount you put at risk on a position.
Stablecoin - A crypto token pegged to a real currency, so USDC equals $1.
T
Taker - A trader whose order fills right away against resting orders. A taker pays a fee of 0.75-1.80% by category.
Tilt - The emotional state, usually after a loss, where your discipline falls apart. It is the top cause of retail blow-ups. See Trading Psychology.
Token ID - The unique ID for one outcome, Yes or No, in the CLOB. You need it to trade.
Tick - The smallest price step in the order book. Polymarket uses $0.01 ticks on most markets.
U
UMA flow: proposal ($750 bond) → 2h challenge window → optional dispute ($750 bond) → DVM 48-96h token-holder vote.
UMA - Universal Market Access. The optimistic oracle that resolves most Polymarket markets. See UMA Disputes.
UMA Token - UMA's governance token. Its holders vote on disputed results in the DVM.
USDC - A US dollar stablecoin issued by Circle, where 1 USDC = $1. It is the currency Polymarket settles in.
UTXO - Unspent transaction output. It does not apply to Polymarket, which is account-based, but tax software sometimes mentions it.
V
Vig (Vigorish) - The house edge. On Polymarket it shows up as fees; on regular sportsbooks it is about 4-10%.
Volatility - How much a price swings over a period.
Volume - The total dollars traded in a market over a window. It is a rough gauge of liquidity and interest.
W
Wallet (Crypto) - Software that holds your private keys and signs transactions. MetaMask, Rabby, and Coinbase Wallet are common ones.
Watchlist - Your own list of markets to keep an eye on.
WebSocket - An always-on, two-way connection for live price and order updates. See API Guide.
Whale - A trader big enough to move prices, usually with $50,000+ in play. See Whale Tracking.
Whitelisted Proposer - A UMA address cleared to submit results after MOOV2. It needs a strong record: 5+ proposals, 95%+ accuracy, over a 6-month rolling window.
Wick - A quick price spike that snaps right back. On high-leverage perps, a wick can trigger a liquidation even if the price recovers seconds later.
X - Y - Z
Yield - The return a position earns over time, shown as a percentage. You will see it in basis and funding trades.
Zero-Sum - A market where total winnings equal total losses before fees. Every prediction market is zero-sum once you subtract the fee drag.
Key Number Reference
| Number | What it represents |
|---|---|
| 7.6% / 84.1% | Profitable / losing Polymarket wallets |
| $750 | UMA bond per proposal or dispute |
| 2 hours | UMA Optimistic Oracle challenge window |
| 48-96h | DVM voting resolution window |
| $100M+ | QCEX acquisition price (July 2025) |
| $5M+/mo | Liquidity rewards (general) plus $5M+/mo sports-specific |
| 60% | Mean-reversion completion within 90-120 min after news |
| ~4 hours | Typical information half-life |
| 9.5x | NegRisk capital efficiency |
| 10x | Max perp leverage on Polymarket |
| 137 | Polygon chain ID |
| 1 (POLY_PROXY) | Standard retail signature type in py-clob-client |
Validated Pro Tips For Using This Glossary
These habits come from what actually trips traders up when they go from the glossary back to live trading. Each one was learned the hard way by a wallet on the losing side of the 84.1% statistic.
- Define before you trade. If any word in a market's title or rules is new to you, come back here first. Do it before you touch the order ticket.
- Know the oracle before you size. UMA, Chainlink, and internal resolution each carry different risks: disputes, oracle lag, human error. Which one resolves your market?
- Token ID is not Condition ID. The Gamma API gives you condition IDs, but the CLOB needs token IDs. Skipping that mapping is a classic bot bug.
- Maker beats taker on almost every trade. A maker pays 0% plus a rebate; a taker pays 0.75-1.80%. Default to limit orders unless you are in a hurry.
- Use quarter-Kelly, not full-Kelly. Full-Kelly growth is real, but full-Kelly drawdowns wipe out accounts. Quarter-Kelly is the pro standard for good reason.
- Use signature type 1 (POLY_PROXY) for retail. The wrong signature type quietly orphans your orders in py-clob-client. Cache it once and paste it every time.
- Fund with USDC on Polygon (chain 137). Bridging USDT or wrong-chain USDC is the #1 support ticket from new traders.
- Delta-hedge with perps, not dollar-for-dollar. A $5K "BTC above $X" position has a spot delta of about $1.5-2K. Short that as your perp size, not the full $5K.
- NegRisk means capital efficiency, not free money. The ~9.5x just lets the trade fit your bankroll. The edge still has to be there in the over-round.
- Mean reversion runs about 90-120 minutes. Roughly 60% of news-driven reversion finishes in that window. Enter only after it, and take winners before it closes.
- Information half-life is about 4h in politics. If your thesis is older than one half-life, the price has likely already paid it out.
- Keep a term-to-action notebook. Each time this glossary saves you a mistake, jot it in your trading journal. That is how a word turns into instinct.
Situation → Action Cheat Sheet
| Situation | Action |
|---|---|
| Market title contains a term you can't define in one sentence | Return to this glossary; do not trade until every word is understood |
| You're about to place a market order on a thin book | Check the spread and top-of-book depth first; likely better served by a limit inside the spread |
| Your bot is dropping orders with "invalid signature" | Signature type mismatch - set POLY_PROXY (1) if retail, POLY_GNOSIS_SAFE (2) if connected browser wallet |
| You need to short BTC delta alongside a long prediction market | Short BTC perp; size to the spot delta of the position, not the total notional |
| You're opening a 5-way NegRisk basis trade | Confirm the adapter path and conversion fee; verify the No-sum mispricing exceeds fees + slippage |
| You see "Resolution Source: custom" | Read the exact UMA question text and decide if the source is unambiguous - ambiguous source = dispute risk = no trade |
| A trade you placed is in an unfamiliar category | Look up the fee (0-1.80%) and mean-reversion behaviour; some categories have meaningfully different dynamics |
| Perp position approaching liquidation price | Add margin OR reduce size; never leave a liquidation inside 1.5× daily ATR |
Key takeaway
Traders who profit on Polymarket treat this glossary as a system, not a gut feel. Keep the numbers above close. They are the gap between the 7.6% of profitable wallets and the rest.
Common abbreviations cheat sheet
These are the acronyms traders use most. Bookmark this table for your first two weeks.
| Abbreviation | Stands for | Plain-English meaning |
|---|---|---|
| CLOB | Central Limit Order Book | The matching engine that pairs buyers with sellers at the best available price. |
| UMA | Universal Market Access | The on-chain oracle network Polymarket uses to resolve most markets. |
| DVM | Data Verification Mechanism | UMA's escalation vote if a dispute is raised. Token holders decide the outcome. |
| EV | Expected Value | (probability × payout) minus cost. The only number that matters over time. |
| GTC | Good Till Cancelled | Limit order that stays open until filled or cancelled by you. |
| FOK | Fill Or Kill | Execute in full immediately at the set price, or cancel with zero fill. |
| DCM | Designated Contract Market | CFTC-licensed exchange class. QCEX operates Polymarket's US venue. |
| KYC | Know Your Customer | Identity verification required for larger US accounts and fiat on/off-ramps. |
What's Next?
- Getting Started - if any term here was unfamiliar, start at the beginning
- Order Book Guide - deep dive on maker/taker, bid/ask, depth, slippage
- Resolution Explained - how UMA, Chainlink, and internal resolution actually work
- API Guide - EIP-712, nonces, WebSocket feed, rate limits in practice
- Perpetual Futures - leverage, margin, funding rate, liquidation
Recommended Reading
Start here if you're new, or jump straight to the page that matches your stage:
