Beginning November 2, Polymarket intends to transition all newly created markets onto Protocol V2, while currently active markets will stay on the existing framework. Simultaneously, the firm is preparing a legal challenge against a regulatory prohibition in the Netherlands.
This upgrade brings in a single positions token contract, pUSD-only collateral, market-specific exchanges, fresh oracle choices, and a revised data service. Markets that already exist will continue utilizing the present Conditional Tokens Framework.
Led by its development team and protocol head Rajath Alex, Polymarket commenced the V2 rollout on October 5. Canary markets are evaluating the architecture through October 30 ahead of the broader transition in November.
Protocol V2 Rebuilds Polymarket Market Infrastructure
Protocol V2 supersedes the Gnosis Conditional Tokens Framework that has been in place at Polymarket since 2019. In this updated framework, every outcome share resides within a singular ERC-1155 positions token contract.
The ERC-1155 standard permits one smart contract to oversee multiple token varieties. Polymarket characterizes the broader V2 framework as unified, modular, and audited. Additionally, the platform will exclusively accept pUSD to back positions as collateral. This arrangement consolidates market backing into a single collateral asset, establishing a standardized model for settlement and accounting.
Furthermore, V2 incorporates distinct exchanges for individual markets alongside a routing mechanism. The router directs orders to the corresponding exchange to facilitate a more cohesive trading experience.
The overhaul also deploys OracleAggregator, enabling Polymarket to leverage multiple oracle providers, with UMA and Chainlink among the supported alternatives.
Consequently, Polymarket can choose an oracle suited to each individual market rather than depending on a single resolution mechanism across the entire platform. Testing of this system via canary markets runs through October 30, preceding the migration of all new markets to V2 on November 2.
Data API v2 Expands Tools for Polymarket Developers
Developers gain access to Data API v2 as well, which operates on Polymarket’s proprietary on-chain indexer. Consequently, the company processes and organizes blockchain data through its internal infrastructure.
The API delivers standardized data formats alongside cursor-based pagination. These capabilities aid developers constructing trading tools, analytics products, and dashboards utilizing Polymarket data. Protocol V2 also underwent evaluations by six auditing firms, including Certora. In addition, the platform’s bug bounty program provides rewards reaching up to USD 5 million for discovering critical vulnerabilities.
Active markets will not automatically migrate to Protocol V2. Positions established via the Conditional Tokens Framework remain in place rather than shifting mid-trade.
Thus, the November 2 update impacts newly generated markets rather than every active position currently running on the platform. This technical shift arrives alongside new user safety enhancements introduced by Polymarket. The platform recently rolled out voluntary lockouts spanning 30 days, one year, or an indefinite period, alongside daily, weekly, or monthly deposit limits for U.S. users.
Also Read: Polymarket Faces Federal Scrutiny as Alleged Fake Influencer Trades Trigger Investigation
Polymarket Challenges Netherlands Gambling Ban
Alongside the protocol deployment, Polymarket intends to contest the Dutch decision blocking access to the platform. According to reports, the company informed Financieele Dagblad that it will bring the dispute before a court.
In February, the Dutch Gambling Authority—known as the Ksa—instructed Polymarket to cease operations. The regulator stated that the firm was providing gambling services without the mandatory Dutch license.
Additionally, the Ksa issued a EUR 420,000 fine against Polymarket and initiated steps to block access to its website. Polymarket disputes the regulator’s categorization, contending that its contracts function similarly to financial derivatives and should instead fall under the purview of the Dutch Authority for the Financial Markets.
Users on Polymarket trade contracts tied to real-world occurrences, which settle based on whether specific outcomes materialize.
The company draws parallels between this framework and futures markets, where traders take positions dependent on future asset values. Conversely, critics cited by Financieele Dagblad likened the contracts to binary options.
Binary options typically feature two potential outcomes and can yield a fixed loss or payout, a product category already prohibited across much of Europe. Dutch users previously traded upwards of USD 30 million in contracts connected to the previous year’s parliamentary election, which featured questions regarding whether various political parties would win or lose seats.
Financieele Dagblad reported in May that numerous Dutch users migrated to rival platforms following the regulatory block. Meanwhile, Polymarket has brought on veteran Goldman Sachs banker Lisa Mantil as head of institutional growth as the platform builds out new infrastructure and navigates regulatory challenges in Europe.
Final Thoughts
Following the conclusion of its canary testing phase, Polymarket will transition new markets to Protocol V2 on November 2. The update introduces pUSD collateral, adaptable oracles, new exchanges, Data API v2, and expanded security audits while the firm prepares its court challenge against the ban in the Netherlands.
