Skip to main contentPolymarket US operates with fully-collateralized contracts, meaning sufficient funds are locked to cover the maximum possible payout at the time the trade is executed. No additional funds are required afterward.
How Collateral Works
When a trade executes at a given price:
Buyers (Long Positions)
- Pay the contract price
- No additional margin required
- Maximum loss: amount paid
- Maximum gain: $1.00 – price paid
Sellers (Short Positions)
- Receive the contract price as proceeds
- Post $1.00 margin per contract (full payout value)
- Fiat balance increases by sale proceeds
- Buying power decreases by (Payout Value – Sale Price)
- Maximum loss: $1.00 – sale price
- Maximum gain: sale price
Example: Trade at $0.40
| Participant | Cash Flow | Margin Required | Buying Power Change |
|---|
| Buyer | –$0.40 | $0 | –$0.40 |
| Seller | +$0.40 | $1.00 | –$0.60 |
Maximum Gain and Loss
Once a trade is executed, maximum gain and loss are fixed and do not change regardless of subsequent price movements.
For a contract trading at $0.40:
| Position | Max Loss | Max Gain |
|---|
| Buy (Long) | $0.40 | $0.60 |
| Sell (Short) | $0.60 | $0.40 |
Settlement and Payout
At settlement, Polymarket Clearing releases funds automatically:
- Winners receive $1.00 per contract
- Losers receive $0
- No margin calls, reconciliations, or additional obligations
Settlement Example: Seller at $0.40
If the seller wins (event does not occur):
- Seller keeps: $0.40 proceeds
- Margin released: $1.00
- Total return: $1.40
- Net profit: $0.40
If the buyer wins (event occurs):
- Seller’s $1.00 margin → paid to buyer
- Seller keeps: $0.40 proceeds
- Net loss: $0.60
Key Points
- Buyers post the purchase price; sellers post $1.00 margin per contract.
- Maximum gain and loss are fixed at the time of the trade.
- Sellers receive sale proceeds but must post full payout value as margin.
- Polymarket Clearing guarantees payout from the seller’s locked margin.
- There are no negative balances or margin calls.
