Polymarket Glossary — Every Term Explained (2026 Edition)

Chapter 33 of 33

The Short Version

Polymarket, like any specialist market, has its own vocabulary. A single trade touches concepts from traditional trading (bid, ask, slippage), DeFi (Polygon, USDC, proxy wallet), prediction markets (Yes/No, resolution, conditional tokens), decentralised oracles (UMA, MOOV2, DVM, bond), and derivatives (perps, funding rate, liquidation). This glossary defines every term a trader needs, in plain English, with cross-links to the deep-dive guides where each concept is explored. Over 120 entries organised A-Z. Bookmark it.

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 informed traders systematically pick off your resting limit orders because they have better information. The primary risk for market makers. See Liquidity Rewards.

APScheduler — Python scheduler library commonly used in bot stacks to run periodic tasks (e.g., rescan markets every 5 minutes).

Arbitrage — Exploiting price differences between markets to lock in profit. On Polymarket, cross-platform arb windows have shrunk to seconds and are dominated by bots. See Advanced Strategies.

Ask (Offer) — The lowest price at which someone is willing to sell shares in the order book.

Atomic Settlement — A trade where all sides clear simultaneously on-chain — no counterparty can back out mid-settlement.

B

Backtest — Evaluating a strategy on historical data to estimate future performance. Polymarket's Data API enables trade-level backtesting.

Base Rate — The historical frequency of an event. Anchors probability estimates before current-event adjustments. See Probability Thinking.

Basis — The difference between two related prices (e.g., perp vs spot, April BTC market vs June BTC market). Basis trades harvest this spread.

Bid — The highest price at which someone is willing to buy shares.

Binary Market — A market with exactly two outcomes: Yes / No. The most common type on Polymarket.

Bond (UMA) — A $750 USDC deposit required to propose or dispute a market resolution via the UMA Oracle. Slashed if the proposal or dispute loses. See UMA Disputes.

Bridge — A service that moves assets between blockchains (e.g., 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 estimates track actual outcomes. A well-calibrated trader's 70% calls come true ~70% of the time.

Catalyst — A scheduled or unscheduled event that triggers price movement (Fed meeting, election night, drug approval, Super Bowl kickoff).

CFTC — Commodity Futures Trading Commission. The US federal regulator of commodity derivatives and now prediction-market event contracts.

Chainlink Data Streams — Sub-second, cryptographically verified price oracle. Polymarket uses it for crypto price-target markets. See Crypto Trading.

CLOB — Central Limit Order Book. The matching engine that pairs buyers and sellers. Orders rest on the book sorted by price. See Order Book Guide.

CLV (Closing Line Value) — Whether you entered at a better price than where the market closed. Positive CLV over many trades is a strong sign of edge.

Condition ID — Unique identifier for a market in the Gamma API. Must be mapped to token IDs for trading. See API Guide.

Conditional Token Framework (CTF) — Ethereum/Polygon standard (Gnosis) that turns prediction market shares into ERC-1155 tokens.

Cost Basis — The price you paid for shares. Drives capital gains / loss calculations. See Tax Guide.

Cross-Margin — When margin is shared across all open positions in an account (vs isolated margin per position). Relevant for perps.

D

DCM — Designated Contract Market. CFTC designation that lets Polymarket operate legally in the US via the QCEX acquisition.

Delta — The sensitivity of a position's P&L to a change in the underlying variable. A 50-cent share has roughly 0.5 delta to the outcome probability.

Depth — Dollar volume available at each price level in the book. Indicates how much you can trade before moving price.

Dispute (UMA) — A challenge to a proposed market resolution. Requires a $750 bond; if upheld, the disputer wins the proposer's bond. See UMA Disputes.

Dune Analytics — SQL-based on-chain analytics platform. Hosts many community-built Polymarket dashboards. See Tools & Resources.

DVM — Data Verification Mechanism. UMA's full token-holder vote, used when Optimistic Oracle disputes escalate. 48-96 hour resolution window.

Dynamic Fee — Polymarket's taker-fee model where the fee scales with proximity to 50% probability. Fees peak near 50c and fall near 0c/100c.

E

Edge — Your probability estimate minus the market price. Positive edge = you think the market is mispriced in your favour.

EIP-712 — Ethereum standard for structured-data signing. Used by py-clob-client to sign Polymarket orders.

EV (Expected Value) — Probability-weighted average outcome. Formula: (p_win × profit) - (p_loss × loss).

F

FAK (Fill And Kill) — Order type: fill whatever is immediately available at the limit price, cancel the rest. Acts like a capped market order.

Favorite-Longshot Bias — Tendency for long-shots to be over-priced and favorites to be under-priced. Documented in every prediction market.

FOK (Fill or Kill) — Order type: fill the entire size immediately or cancel. All-or-nothing. Useful for arbitrage legs.

Funder Address — Your proxy wallet address. Set in the py-clob-client funder parameter.

Funding Rate — In perpetual futures, the periodic payment between longs and shorts that keeps perp price aligned with spot. Typically ±0.01%/8h. See Perpetual Futures.

G

Gamma API — Polymarket's market-discovery REST API. Returns markets, prices, volume, metadata. Unauthenticated.

Gas — The fee paid to the blockchain for executing a transaction. On Polygon, typically pennies; on Ethereum mainnet, can be much higher.

GTC (Good Till Cancelled) — Default order type. Rests on the book until filled or you cancel.

GTD (Good Till Date) — Order that auto-cancels at a specified time.

H

Half-Life (Information) — How long it takes for the price impact of news to decay by 50%. On Polymarket, roughly 4 hours for typical news events.

Hedge — A position taken to reduce exposure to an adverse outcome. Properly sized hedges are not dollar-for-dollar — see Advanced Strategies.

Heuristic — A mental shortcut used to estimate probabilities quickly (e.g., "incumbent presidents are favored in strong economies").

I

Implied Probability — The market's current share price interpreted as a probability (a $0.65 share = 65% implied probability).

Implied Volatility — The magnitude of price movement implied by option or ladder-market prices. Short-duration crypto markets on Polymarket effectively price implied vol.

Informed Flow — Trading volume from participants with an information edge (insiders, analysts, faster news feeds). Whale trackers try to catch this.

K

Quarter-Kelly captures most of the growth with drawdowns that retail psychology can actually survive — the professional default.

Kelly Criterion — Formula for the optimal fraction of bankroll to wager given your edge. Full-Kelly is too volatile; quarter-Kelly is the professional standard. See Position Sizing.

KYC — Know Your Customer. Identity verification required for deposits, higher volumes, and US DCM access.

L

Ladder Market — A series of related markets with progressive price/outcome thresholds (e.g., BTC above $100K / $110K / $120K by date).

Limit Order — Order with a specific price. Fills at your price or better. Pays 0% fees and earns maker rebates.

Liquidation — In perps, forced closure of a leveraged position when losses exceed maintenance margin. See Perpetual Futures.

Liquidity — Ease of buying/selling without moving price. More liquidity = tighter spreads + less slippage.

Liquidity Rewards — Polymarket's ~$5M+/month general program plus $5M+/month sports-specific program paying rebates to two-sided market makers. See Liquidity Rewards.

Long — Position that profits if 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 — Trader whose limit order rests on the book, providing liquidity. Pays 0% fee, earns rebate.

Maker Rebate — 20-25% of taker fees returned to makers as a reward for providing liquidity.

Margin — Collateral posted to open or maintain a leveraged position in perps.

Market Maker — A trader who continuously quotes both sides (bid + ask) to earn the spread and rebates.

Market Order — Order that executes immediately at best available price. Pays taker fee (0.75-1.80% depending on category).

Mean Reversion — Tendency of overextended prices to pull back to fair value. On Polymarket, ~60% of mean-reversion completes within 90-120 minutes of a news event.

Mention Market — A market resolving on word frequency in a speech or event (e.g., "How many times will the Fed chair say 'inflation'?"). See Science & Tech Trading.

Midpoint — Price exactly between best bid and best ask. Reference point for liquidity rewards.

MOOV2 — Managed Optimistic Oracle V2. UMA upgrade (August 2025) restricting market resolution proposals to whitelisted addresses. Post-launch: 59% fewer bad proposals, 68% fewer disputes. Whitelist grew from 37 to 177 addresses through 2025-2026.

Multi-Outcome Market — Market with 3+ outcomes (Oscar winner, election, race winner). 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 — Negative-risk mechanism for multi-outcome markets. Recognises that only one outcome can win, reducing required collateral. Achieves ~9.5x capital efficiency vs raw CTF.

NegRisk Adapter — Smart contract that wraps binary CTF positions into capital-efficient multi-outcome positions.

Nonce — A counter included in signed orders to prevent replay attacks. py-clob-client manages nonces automatically.

Notional — Total dollar size of a leveraged position (margin × leverage).

O

Optimistic Oracle (UMA) — UMA's default resolution mechanism: proposed answer is assumed correct unless disputed within 2 hours. Low-friction when answers are obvious.

Oracle — System that brings off-chain data (real-world outcomes) on-chain for smart contract use. Polymarket uses UMA and Chainlink.

Order Book — All pending buy and sell orders sorted by price. See Order Book Guide.

Outcome Token — A share representing one outcome. Pays $1.00 if correct, $0.00 if incorrect.

Overreaction — Market moving further than new information justifies. 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) — Continuous leveraged contracts with no expiry. Polymarket launched April 21, 2026 with BTC, NVDA, Gold at up to 10x. See Perpetual Futures.

Polygon — Ethereum Layer-2 chain where Polymarket trades settle. Low fees, fast confirmations.

Position — Your current holding (shares × side × cost basis).

POLY_PROXY — Signature type 1 in py-clob-client. The standard setting for retail proxy-wallet users.

Probability — Estimated likelihood of an event. On Polymarket, share price in dollars ≈ implied probability (0.65 = 65%).

Proposer — Address submitting a resolution outcome via UMA. Post-MOOV2, only whitelisted proposers are accepted.

Proxy Wallet — A Gnosis Safe-style wallet that executes trades on behalf of your main wallet. Your private key never signs trades directly.

pUSD — Polymarket's internal USDC-backed collateral token.

Q

QCEX — CFTC-licensed exchange acquired by Polymarket in July 2025 for $112M to enable US market re-entry.

Quarter-Kelly — One-fourth of the Kelly Criterion's recommended bet size. Standard professional sizing.

R

Rebate — Payment from exchange to makers for providing liquidity. On Polymarket, 20-25% of taker fees.

Resolution — Determining and settling a market's outcome. Can be UMA, Chainlink, or internal Polymarket team.

Resolution Source — The authoritative source for resolving a market (e.g., AP/Fox/NBC for US elections; BLS for CPI data).

Retry-After — HTTP header returned with 429 rate-limit responses indicating when to retry.

S

Section 1256 — US tax code section providing 60/40 long-term/short-term capital gains treatment for certain regulated futures contracts. Relevant to Polymarket perps.

Share — Unit of a prediction market position. $1.00 if correct, $0.00 if incorrect.

Short — Position that profits if outcome is No (or tracked asset falls in perps).

Signature Type — py-clob-client configuration. 0 = direct wallet; 1 = POLY_PROXY (standard retail).

Slippage — Difference between expected and actual execution price. Worse in thin books or with large orders.

Spoofing — Placing large orders you intend to cancel to fake liquidity. Manipulative and prohibited.

Spread — Best ask minus best bid. Tighter = more liquid.

Stake — Dollar amount risked on a position.

Stablecoin — A crypto token pegged to a fiat currency (USDC = $1).

T

Taker — Trader whose order executes immediately against resting orders. Pays taker fee (0.75-1.80% by category).

Tilt — Emotional state (usually post-loss) where discipline breaks down. Highest cause of retail blow-ups. See Trading Psychology.

Token ID — Unique identifier for a specific outcome (Yes or No) in CLOB. Required for trading.

Tick — The smallest price increment in the order book (Polymarket uses $0.01 ticks for 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 protocol that resolves most Polymarket markets. See UMA Disputes.

UMA Token — The governance token whose holders vote on disputed resolutions in the DVM.

USDC — Circle-issued US dollar stablecoin. Polymarket's settlement currency.

UTXO — Unspent transaction output. Not directly relevant to Polymarket (account-based) but sometimes referenced in tax software.

V

Vig (Vigorish) — The house edge. On Polymarket this appears as fees; on traditional sportsbooks it's ~4-10%.

Volatility — Magnitude of price movement over a period.

Volume — Total dollar amount traded in a market over a time window. Proxy for liquidity and interest.

W

Wallet (Crypto) — Software that holds your private keys and signs transactions. MetaMask, Rabby, Coinbase Wallet are common.

Watchlist — Your curated list of markets to monitor.

WebSocket — Persistent bidirectional connection used for real-time price / order updates. See API Guide.

Whale — Trader large enough to move prices, typically $50,000+ deployed. See Whale Tracking.

Whitelisted Proposer — UMA address authorised to submit resolutions post-MOOV2. Requires strong track record (5+ proposals, 95%+ accuracy, 6-month rolling window).

Wick — A brief price spike that quickly reverts. On high-leverage perps a wick can trigger liquidation even if the move is fully recovered seconds later.

X - Y - Z

Yield — The return earned from a position over time, expressed as a percentage. Often used in basis / funding trades.

Zero-Sum — A market where total winnings equal total losses (pre-fees). All prediction markets are zero-sum minus the fee drag.

Key Number Reference

Validated Pro Tips For Using This Glossary

Reference habits compiled from what actually trips up traders when they move from the glossary back to live trading. Each is a lesson earned in production by at least one wallet on the losing side of the 84.1% statistic.

Situation → Action Cheat Sheet

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