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Polymarket only supports fully-collateralized contracts, meaning both sides post the full amount required to cover the maximum possible payout at the time the trade is executed. No additional funds are required afterward.

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What Fully-Collateralized Means

When buying and selling contracts:
  • Both buyer and seller post full collateral upfront.
  • Polymarket Clearing holds these funds until settlement.
  • At settlement, the funds are released.
Every contract is fully-collateralized. This ensures that negative balances are impossible and payouts are guaranteed at settlement. Example
ParticipantFunds Posted
Buyer$0.40
Seller$0.60
Polymarket Clearing$1.00

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Maximum Gain and Loss

  • Maximum loss is the amount paid for the contract.
  • Maximum gain is the difference between $1 and the amount paid.
  • Once the trade is executed, maximum gain and loss do not change.
Example
PositionMax LossMax Gain
Buy Yes$0.40$0.60
Sell Yes$0.60$0.40

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Settlement and Payout

  • At settlement, Polymarket Clearing releases funds automatically.
  • The winner receives $1 per contract; loser receives $0.
  • No margin calls, reconciliations, or additional obligations.

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Key Points

  • Buyer and seller post full collateral upfront.
  • Maximum gain and loss are fixed at the time of the trade.
  • No additional funds are required after the trade.
  • Polymarket Clearing guarantees payout.
  • There are no negative balances.