How Does Polymarket Makes Money: Explained

Polymarket has quickly become the best-known prediction market in the world, letting users trade on the outcomes of elections, sports, macro events, tech launches, and more. Under the hood, however, its business model looks very different from a typical betting site or centralized exchange.

The industry is projected to grow into the multi-billion-dollar range, driven by demand for alternative forecasting tools. Polymarket is tapping into this trend by focusing on liquidity, attracting market makers, and building valuable sentiment data resources it could monetize in the future through analytics, partnerships, or premium features.

As of 2025, Polymarket still runs its main global platform with zero direct trading fees, while simultaneously preparing a regulated U.S. venue with ultra-low fees and closing massive strategic deals with traditional finance players.

This article breaks down exactly how Polymarket makes money today, what its future revenue streams look like, and how you can build a Polymarket-style platform of your own.

Key Market Takeaways of Prediction Market

The global predictive analytics market size was valued at USD 5.7 billion in 2018 and is expected to register a CAGR of 23.2% over the forecast period. Predictive analytics is a flexible analysis tool that helps organizations implement optimal solutions for growth and anticipate potential future scenarios.

Source: GrandViewResearch

The retail and e-commerce sector is expected to experience the highest growth in the global market. The increasing demand for personalized and customized shopping experiences is a key factor driving the need for predictive analytics in this segment. Additionally, advancements in technologies like AI, AR, and machine learning are anticipated to fuel market growth further. The widespread use of social media, greater internet access, and the growing reliance on data-driven platforms have also boosted the demand for predictive analytics solutions.

The Asia Pacific region is projected to experience the highest CAGR during the forecast period. The rising adoption and implementation of advanced predictive analytics solutions drive this rapid growth. The region’s significant market potential is also encouraging solution and service providers to expand their operations there. Additionally, the growing emphasis on and investment in emerging technologies like AI, IoT, and machine learning are expected to propel market growth in the Asia Pacific further.

How Polymarket Makes Money in 2025 (Quick Answer)

In plain language, here is how Polymarket’s business model currently works:

• Global platform (non-U.S.)
  • No platform trading fees, no deposit/withdrawal fees charged by Polymarket itself.
  • Users still pay network fees and on-ramp/off-ramp costs to third parties (exchanges, payment processors, wallets), and trades happen against liquidity providers (LPs) who earn spreads and protocol-level fees.
  • The fee logic exists at the smart-contract level but is currently set to zero for Polymarket’s “house” revenue.
• Regulated U.S. venue (Polymarket US / QCEX)
  • For its U.S. reopening through a CFTC-supervised venue, Polymarket US plans to charge around 0.01% trading fee (1 basis point) on contracts, far lower than competitors such as Kalshi.
• Funding and strategic deals
  • Polymarket has raised at least $70M across Series A and Series B rounds from backers such as Founders Fund, General Catalyst, Polychain, and Vitalik Buterin.
  • In 2025, Intercontinental Exchange (ICE), the parent of the New York Stock Exchange, announced a planned investment of up to $2B and a partnership to distribute Polymarket’s event-driven data and support tokenization initiatives.
• Future revenue
  • Near-zero trading fees on regulated U.S. markets.
  • High-value prediction data and analytics expected to be monetized via institutional APIs and data distribution deals (for example, the ICE partnership).
  • Potential licensing/white-label infrastructure and tokenization products built on top of the prediction engine.

Overview: Prediction Market Polymarket

Polymarket is a decentralized, blockchain-based prediction market platform where users can trade on the outcomes of real-world events from politics and economics to science and pop culture. Built on the Polygon blockchain, it operates without a central authority, using smart contracts to enable secure and transparent trading. Polymarket not only offers a platform for speculation but also generates valuable data on public sentiment and crowd-based forecasting.

Key Features of Polymarket

1. Decentralization & Transparency – Leveraging Polygon’s smart contract technology, Polymarket ensures transactions are trustless no intermediaries are requiredand all trade data is transparent and publicly verifiable.

2. Diverse Market Topics – Users can trade on a wide variety of events, including global news, financial markets, technology trends, sports, and public health making the platform appealing to a broad audience.

3. Ease of Use & Accessibility – Polymarket is designed with an intuitive interface, making it accessible to both newcomers and experienced traders. Markets are traded in USDC, a stablecoin pegged to the U.S. dollar, which protects against typical cryptocurrency volatility.

4. Reliable Outcome Resolution – Event outcomes are determined by clear, pre-defined resolution sources (often reputable news outlets) and resolved via a decentralized oracle system. Once an event concludes, the oracle reports the result, triggering fair payouts for winning shares.

How Does Polymarket Work?

At its core, Polymarket is a decentralized prediction market platform. Users trade “shares” in the outcome of real-world events (YES/NO contracts) using stablecoins such as USDC. Prices move based on supply and demand and can be interpreted directly as probabilities (for example, a YES share at $0.65 implies a 65% market-implied chance of the event happening).

Key building blocks:

Oracles & settlement
When an event resolves (for example, election results, CPI data release), Polymarket’s oracle layer reports the outcome, and the smart contract automatically pays out winning shares at $1 and losing shares at $0.

Orderbook and AMM logic
Markets are run via smart contracts on-chain and off-chain services that maintain the orderbook and pricing engine. Prices are set by the balance of buyers and sellers and, in some markets, automated market maker (AMM) formulas.

Liquidity providers (LPs)
LPs deposit capital into markets and earn spreads and protocol-level trading fees (when enabled), compensating them for taking risk and keeping markets liquid.

1. Event Markets

• Each event is represented as a market with possible outcomes (e.g., Yes / No).
• Shares in these outcomes are priced between $0 and $1, representing the market’s probability estimate.
  • For example, if YES is priced at $0.70, the market estimates a 70% chance of it happening.

2. Trading Outcome Shares

• Users buy shares in the outcome they believe will happen.
• If their prediction is correct, each share is worth $1 at resolution.
• If they’re wrong, the shares become worthless.
• Prices fluctuate as traders buy and sell, reflecting changing sentiment.

3. Settlement in USDC

• All trading is done using USDC (USD Coin), a stablecoin pegged to the U.S. dollar.
• This ensures stable pricing without crypto volatility affecting outcomes.

4. Zero Trading Fees

• Polymarket charges no fees on trades.
• Users only face natural bid–ask spreads (set by liquidity providers) and possible blockchain network fees for deposits/withdrawals.

5. Market Resolution

• Each market is tied to a clear resolution source (e.g., official election results, reputable news outlets).
• Once the outcome is known, the market is resolved and winning shares are paid out at $1 each.

6. Liquidity & Price Discovery

• Liquidity providers ensure there’s always someone to trade with.
• They earn from small pricing spreads, helping keep the market active and competitive.
• Prices adjust dynamically based on real-time demand and supply.

Example:

• If Candidate X wins, you receive $100 USDC (100 × $1), making a $45 profit.
• A market asks: “Will Candidate X win the 2028 U.S. Presidential Election?”
• YES shares are trading at $0.55 and NO shares at $0.45.
• You buy 100 YES shares for $55 USDC.

Summary Table

Polymarket’s Fee Structure: Where the Money Actually Goes

Zero Trading Fees on the Global Platform

Polymarket’s official documentation is very explicit:

• “Polymarket does not charge any type of fee.”
• “There are no fees to deposit or withdraw USDC… There are no fees to trade shares in any market.”

In practice, this means:

• Users pay:
  • Gas/network costs.
  • Fees on exchanges, wallets, and payment processors (for example, Coinbase, MoonPay, etc.).
• Polymarket itself does not take a cut of each trade on the main global platform (as of 2025).

This is a sharp contrast with many centralized betting sites that rely heavily on betting margins and house vig.

Liquidity Provider Fees and Spreads

Even though Polymarket does not currently charge platform trading fees, fees and spreads still exist at the market level:

• When a user trades, a small fee in USDC can be charged and routed to liquidity providers, not to the Polymarket company. Medium
• Smart contracts have parameters for trading fees, but those are either set to zero for the “house” cut or configured to reward LPs instead.

From a business-model perspective, this matters because:

• These LP fees improve market quality without directly funding Polymarket’s operations.
• Polymarket’s long-term revenue plan can turn on who receives these fees (LPs only vs. LPs plus a small protocol fee).

Ultra-Low Fees for the U.S. Regulated Venue

To legally serve U.S. users, Polymarket acquired QCEX/QC Clearing, a CFTC-licensed exchange, and has been working with regulators on a fully supervised re-entry into the U.S. market.

For Polymarket US, the fee plan looks very different:

• Trading fee: around 0.01% (1 basis point) on the total contract premium for taker orders that are immediately matched. Phemex+1
• This is dramatically lower than competitors such as Kalshi, where effective fees are reported to be around 1.2% on average. InGame

This near-zero fee model is:

• A clear competitive positioning move: “We are 100x cheaper than traditional prediction venues.”
• A direct revenue stream for the U.S.-regulated business, since the venue itself charges those basis-point fees.

Is Prediction Marketplace Like Polymarket Profitable?

As of November 2024, Polymarket has not disclosed specific revenue figures or a clear profitability status. However, the platform has raised substantial funding, including a recent $45 million Series B round led by Founders Fund in May 2024, bringing its total funding to around $111 million. This level of investment suggests strong market confidence in the potential profitability of prediction marketplaces.

Polymarket’s primary revenue streams likely include transaction fees from trades, which are typically between 1% to 5%, and possibly liquidity fees from users providing stability to market events. If user engagement and trading volume are high, these fees could yield substantial income over time. Nevertheless, without clear data on costs, user retention, and operational expenses, it’s challenging to ascertain if Polymarket has reached or is close to profitability.

Prediction markets do hold strong profitability potential due to the high engagement and recurrent trading they generate, but profitability would depend heavily on user growth, retention, and market expansion.

Business Model of Polymarket

Polymarket is one of the fastest-growing decentralized prediction platforms, enabling users to bet on real-world events using cryptocurrency. Its standout feature? Zero trading fees for users. Despite this, the platform has built a sustainable ecosystem fueled by liquidity incentives, partnerships, and venture capital funding.

1. No Trading Fees for Users

Unlike many prediction platforms, Polymarket does not charge a fee on trades. Users can buy and sell shares in markets without the platform taking a cut. This zero-fee model has been a major growth driver, attracting both retail speculators and professional traders.

• Impact: Lower friction for traders, more frequent transactions, and higher liquidity.

2. Liquidity Provider Spreads

While there’s no direct fee, market makers (liquidity providers) earn from the bid–ask spread—the small difference between buy and sell prices. This spread is part of natural market dynamics and goes to liquidity providers, not Polymarket itself. In return, these liquidity providers help keep markets active and competitive.

3. Venture Capital Funding

Polymarket’s operations and user incentives are largely supported by venture capital. The company has raised significant funding from major backers such as Founders Fund, Polychain Capital, and other crypto investors. This capital allows the platform to run without charging trading fees while still offering robust infrastructure and incentives.

4. Data & Sentiment Value

Even though Polymarket does not currently monetize directly from trading, the aggregated market data it generates—covering politics, economics, sports, and more is extremely valuable. This real-time crowd-driven sentiment can be leveraged in partnerships with media outlets, research firms, and financial analysts in the future.

5. Potential Future Revenue Streams

Polymarket could eventually introduce revenue-generating features such as:

• Premium analytics tools for traders
• API access for institutional clients
• Sponsorships and branded markets
• Fee-based liquidity programs for advanced traders

Why This Model Works

Polymarket’s zero-fee approach lowers the barrier to entry, drives higher trading activity, and builds network effects. By prioritizing growth and liquidity first backed by VC capital it positions itself to monetize in the future without alienating its existing user base.

What You Don’t Pay

• No platform trading fees: Polymarket takes 0% from your trades.
• No deposit or withdrawal fees from Polymarket itself (though payment processors may charge).

What You Do Pay

1. Bid–Ask Spread
   • Because trades are matched through automated market makers (AMMs), you’ll almost always pay a small spread when buying or selling.
   • This goes to liquidity providers, not Polymarket.
2. Network (Gas) Fees
   • Transactions happen on the Polygon blockchain.
   • Gas fees are low compared to Ethereum, but they still exist especially for deposits, withdrawals, and on-chain settlements.
3. On-Ramp/Off-Ramp Fees
   • If you buy USDC via MoonPay, Coinbase, or another payment gateway, those services may charge a fee.

In short: Polymarket isn’t making money from your trades today. Instead, it’s playing the long game growing liquidity, building a loyal user base, and positioning itself for future monetization opportunities, all while being VC-funded.

Current and Future Revenue Streams

Putting everything together, here are the realistic revenue levers for Polymarket in 2025 and beyond.

1. Trading Fees on Regulated U.S. Venues

• Polymarket US plans a 0.01% trading fee on contract premiums for taker orders.
• While tiny on a per-trade basis, at high volume this can still produce meaningful revenue, similar to low-margin, high-volume stock exchanges.

2. Event-Driven Data and Analytics

• ICE’s role as a global distributor of Polymarket data points to a business model where institutional investors, media, and trading firms pay for:
  • Real-time market odds feeds.
  • Historical prediction data.
  • APIs for integrating those probabilities into models, dashboards, and trading strategies.

Because prediction markets can often be more accurate and faster than polls or pundits, this data has clear institutional value. Polymarket Docs+1

3. LP and Protocol Fees (Future Tuning)

• Smart contracts already support fee parameters, currently set so that LPs are the primary beneficiaries rather than Polymarket itself.
• Over time, Polymarket could:
  • Introduce a small protocol fee on top of LP fees.
  • Share those fees with a token treasury.
  • Create premium market tiers with different fee structures.

Any such changes would effectively turn “protocol fees” into a standard Web3 revenue stream, while trying to preserve low friction for users.

4. White-Label, Licensing and Tokenization Products (Speculative, but Logical)

Given the ICE partnership and QCEX acquisition, it is reasonable to expect Polymarket to explore:

• White-label prediction market infrastructure for financial institutions, sports books, or media brands.
• Licensing of:
  • Core matching engine.
  • Market resolution/oracle framework.
  • Risk management systems.
• Tokenization and derivatives tied to event probabilities, settled on traditional exchanges.

While not fully public yet, these are natural extensions for a prediction market that is now plugged into Wall Street.

How To Create A Price Prediction Model?

Creating a price prediction model begins with defining the problem and collecting relevant data. Depending on the asset, use historical price data, market sentiment, and external factors that influence prices. You can source this data from APIs like Yahoo Finance or Quandl. After gathering the data, preprocessing is essential, which includes cleaning the data, handling missing values, and normalizing the dataset. Additionally, feature engineering plays a key role, where you create indicators like moving averages or volatility metrics. You can use time series models like ARIMA or machine learning models like Neural Networks to predict future prices.

1. Pick Clear, Well-Defined Events

Your market should have questions with unambiguous outcomes — e.g., “Will Candidate X win the 2028 election?” This prevents disputes and ensures smooth payouts.

2. Use Prices as Probabilities

In prediction markets, the price of a YES share is the implied probability. Example: $0.72 = 72% chance. This works because winning shares pay $1 if the event happens.

3. Choose a Pricing Method (Orderbook or AMM)

• Orderbook (Polymarket’s approach): Price is based on the best bid/ask midpoint or last trade.
• Automated Market Maker (AMM): Uses a formula (like LMSR) to adjust prices instantly based on trades.

4. Represent Outcomes with Tokens

For each market, issue two tokens YES and NO that together represent one full payout. 1 YES + 1 NO = $1 collateral. When a trade happens, one is bought and the other is sold.

5. Handle Collateral and Settlement

Lock funds (usually stablecoins like USDC) in a smart contract or secure custody. At resolution, winning tokens can be redeemed for $1, losing ones expire worthless.

6. Update Prices Based on Trades

When traders buy YES shares, the price goes up (probability increases). When they sell, it goes down. In AMMs, this happens automatically via a formula; in orderbooks, it’s set by trader orders.

7. Calibrate and Display Probabilities Clearly

Make sure your displayed odds reflect real market activity. Smooth out extreme moves with average pricing or filters to prevent sudden spikes from low-volume trades.

8. Use Trusted Oracles for Resolution

An “oracle” is the data source that confirms the event outcome e.g., official sports websites, government election results, or verified news agencies. This ensures results are accurate and final.

9. Manage Risk and Fairness

Set rules to prevent manipulation (e.g., wash trades, fake markets, or insider trading). Have limits on bet sizes or exposure to protect liquidity providers.

10. Build a Transparent and Easy-to-Use Interface

The success of your platform depends on trust and usability. Show live prices, historical charts, and clear market rules. Let users easily buy/sell shares and track their positions in real time.

How to Monetize a Polymarket-Like Platform of Your Own

If you are considering building a Polymarket-style platform, you are not limited to Polymarket’s exact model. In fact, you have more direct monetization options than they currently use on their global platform.

Common revenue streams for prediction-market or event-trading platforms:

1. Trading Fees (Maker/Taker)
   • Tiered fee schedules based on volume.
   • Higher fees for high-risk or exotic markets, lower fees for liquid core markets.
2. Market Creation Fees
   • Charge a small fee to create or list new markets.
   • Offer fee discounts to institutional or verified market makers.
3. LP Fees with Protocol Cut
   • Let LPs earn most of the fees, while the platform takes a small share.
   • Design smart-contract parameters that keep spreads tight and markets healthy.
4. Premium Analytics & APIs
   • Institutional-grade dashboards with:
     • Live odds feeds.
     • Historical correlations.
     • Scenario analysis and alerts.
   • Subscription plans or usage-based pricing for API access.
5. B2B White-Label Platforms
   • License your underlying engine to:
     • Media groups (election forecasting widgets).
     • Sports operators (market-driven live odds).
     • Enterprises (internal forecasting markets).
6. Sponsored or Branded Markets
   • Run sponsored markets for brands, events, or leagues (for example, “Official prediction partner” campaigns), while keeping outcomes fair and transparent.

A well-designed platform can combine several of these levers and still keep end-user fees low enough to remain competitive.

How to Build a Platform Like Polymarket

If your goal is to develop a prediction-market platform rather than use one, you’ll need more than a high-level business model.

Core Components You Will Need

• Market Engine
  • Orderbook or AMM logic for pricing and matching trades.
  • Support for YES/NO markets, multi-outcome markets, and possibly continuous ranges.
• On-Chain Settlement Layer
  • Smart contracts for:
    • Issuing and burning market shares.
    • Holding and releasing collateral (usually stablecoins).
    • Distributing payouts when events resolve.
• Liquidity & Risk Management
  • LP pools with configurable fee and incentive structures.
  • Circuit breakers and guardrails for extreme volatility or oracle disputes.
• Oracle & Resolution Framework
  • Verified sources for each market type (for example, official election commissions, sports feeds, government statistics).
  • Clear dispute resolution rules and time windows.
• Compliance, KYC and Geofencing
  • Different models for:
    • Fully offshore DeFi-style deployments.
    • Regulated setups (similar to Polymarket US under CFTC oversight).
• Admin and Monitoring Dashboards
  • Risk dashboards to track exposure, volume, and unresolved markets.
  • Tools for managing user access, disputes, and market suspension.

Typical Tech Stack

A Polymarket-like platform often uses:

• Smart Contracts: Solidity (EVM chains like Polygon, custom L2s, or app-chains).
• Backend Services: Node.js/TypeScript, Go, or Rust for event processing, oracles, and off-chain order matching.
• Frontend: React or Next.js for responsive web apps; optional mobile clients.
• Infrastructure:
  • Hosted nodes/indexers.
  • Monitoring, logging, and security tooling.
  • Data warehouses and analytics pipelines.

Where a Development Partner Fits In

Building such a platform from scratch is:

• Technically complex (especially around oracle design and AMM/orderbook logic).
• Legally sensitive (compliance with securities, derivatives, and betting laws).
• Expensive to redo if architecture decisions are wrong early on.

A specialist Web3 and fintech development partner can help you:

• Choose whether to go off-chain orderbook + on-chain settlement, pure on-chain AMM, or a hybrid.
• Design monetization models that keep your platform attractive for users, LPs, and regulators.
• Plan an MVP that can be built in a defined budget and timeline, while leaving headroom for features like:
  • Programmatic market creation.
  • Institution-grade data APIs.
  • White-label modules for B2B partners.

Conclusion

In my opinion, the business model showcases how Polymarket makes money with the profitability and sustainability of a well-designed prediction market platform. By strategically leveraging transaction fees, market creation fees, and data monetization, Polymarket has built a diverse set of revenue streams that capitalize on user activity and engagement. The platform’s DeFi integrations further enhance user participation, offering liquidity options that increase trading volumes while incentives ensure a loyal and active user base.

Together, these components create a scalable business model that benefits both users and the platform. For entrepreneurs interested in prediction markets, Polymarket’s approach highlights how thoughtful design and diverse revenue strategies can lead to a profitable venture.

Want to make a platform like Polymarket?

At Idea Usher, we are dedicated to transforming your ideas into reality, not just building apps. With more than 500,000 hours of coding experience, our team has developed the expertise to create decentralized prediction marketplaces like Polymarket.

We are excited to apply our knowledge to design a platform that meets your specific requirements, incorporating strong smart contract integration, secure transactions, and user-friendly features.

We recognize the potential of prediction markets and are dedicated to helping you create a standout platform. Let us help you build a scalable, profitable solution and support you every step of the way.

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FAQs

What are market creation fees, and why are they important?

Market creation fees are charges imposed on users who create new prediction markets on the platform. These fees encourage quality-relevant market creation and prevent spammy or low-value markets. They also serve as a revenue source and help offset operational costs, ensuring the platform remains sustainable and well-managed.

How does data monetization work in prediction markets?

Businesses and researchers can purchase anonymized, aggregated trading data for trend forecasting and market analysis through data monetization. This creates an additional revenue stream that leverages user activity without infringing on privacy.

How do incentives affect the profitability of prediction markets?

Incentives such as bonuses or rewards for accurate predictions encourage user engagement and increase trading activity. More trades lead to higher transaction fees, driving sustained growth in users and revenue for the platform. Engaging users effectively ensures a positive cycle of activity and profitability.

What industries benefit from prediction market data?

Industries such as finance, marketing, political analysis, and even healthcare can benefit from the insights provided by prediction markets. By analyzing crowd behavior and forecasting trends, businesses and researchers can make more informed decisions and develop better strategies for their respective markets.