Prediction market platform Polymarket has begun rebuilding its smart contract infrastructure, laying the groundwork for new market features and a potential expansion beyond the Polygon network.

The company started rolling out Protocol V2 on Monday, introducing a new smart contract system designed to support different market types through a single exchange, according to an X post by Rajath Alex, the company's head of protocol. The platform is testing the system on a limited number of live markets through Oct. 30, with a tentative target of Nov. 2 for switching new markets to V2. Because those contracts execute trades and settle outcomes directly on-chain, the upgrade touches the core mechanics behind every market the platform runs.

The overhaul replaces infrastructure built on code developed in 2019, which required additional contracts to support new market types — a constraint that compounds as the range of market types grows.

pUSD becomes the sole collateral token

Protocol V2 uses Polymarket USD (pUSD) as its sole collateral token, alongside a single contract for position tokens and one exchange supporting different market types.

Introduced as part of an exchange upgrade in April 2026, pUSD is a collateral token backed 1:1 by Circle's dollar-pegged stablecoin, USDC. A single collateral token means traders can move one dollar-denominated asset between every market on the platform.

The new protocol is designed to support the transfer of positions, collateral and market outcome data between blockchains, although Polymarket has not announced when cross-chain functionality will launch or which networks it will support. Multi-chain operation is an increasingly common design goal for decentralized applications, since it allows a protocol to serve users across several networks rather than a single one.

Polymarket currently operates its prediction markets on Polygon, an Ethereum scaling network, where pUSD is also issued. Cointelegraph reached out to Polymarket for details on which blockchains it plans to support and when such an expansion could take place.

Upgradeable contracts and a new oracle system

Protocol V2 introduces upgradeable smart contracts, allowing Polymarket to modify its contracts through a "secure governance process" and reducing the need to deploy additional contracts when adding new features. Upgradeability is a widespread design pattern in decentralized finance, letting teams patch bugs and ship features without redeploying from scratch while the governance process controls what changes are approved.

The upgrade also adds OracleAggregator, a system designed to connect to different oracles, including UMA and Chainlink, to determine market outcomes. Oracles are third-party services that feed external data, such as real-world event results, to blockchains, which cannot retrieve such information on their own; connecting to several providers spreads reliance across resolution sources rather than a single one.

Polymarket said the new system underwent audits by blockchain security firms including Cantina, Quantstamp and Zellic, as well as formal verification by Certora. The company is offering bug bounty rewards of up to $5 million for critical vulnerabilities. Security reviews and bounties are standard safeguards in decentralized finance, where contract code directly controls user funds.

According to Polymarket's Protocol V2 migration guide, existing positions will not be converted to V2, and app and website users will not need to take technical steps to migrate, although they may be asked to approve new contracts when trading. The tentative Nov. 2 cutover for new markets is the next milestone to watch, alongside any announcement on which chains Polymarket would support beyond Polygon.

Source: Cointelegraph - https://cointelegraph.com/news/polymarket-smart-contract-overhaul-protocol-v2