Glossary
Prediction market glossary
Every term a Polymarket or Kalshi newcomer will encounter, defined in plain English with a concrete example.
Arbitrage
Polymarket and Kalshi sometimes have different prices on the same event — if the gap is large enough, arbitrage captures a guaranteed profit.
Ask
When you want to buy a contract, you buy at the best ask.
Bid
When you want to sell a contract, you sell into the best bid.
Bridge
Bridges are a common attack surface in crypto — use trusted ones (Polygon Portal, Across, Stargate).
CFTC
CFTC oversight is what makes Kalshi legal for US retail users.
CLOB (Central Limit Order Book)
The CLOB is the matching engine behind both Polymarket and Kalshi. It's what you see when you look at a market: bids on one side, asks on the other, matched when prices cross.
Collateral
When you split 100 USDC into 100 YES + 100 NO, the 100 USDC is held as collateral in the smart contract.
Conditional token
The on-chain representation of your Polymarket position. Every YES and NO share is a conditional token.
Depth
Depth is a real-time measure of how much you can buy or sell before the price moves significantly.
Designated Contract Market (DCM)
CME, ICE, and Kalshi are all DCMs under CFTC authority.
Dispute window
If a resolution is wrong, you have limited time to dispute before it becomes final.
ERC-1155
Each market's YES and NO tokens are different IDs within the same ERC-1155 contract.
ERC-20
Most of crypto's fungible tokens use ERC-20.
Expected value
A positive-EV trade is profitable on average over many repetitions. A negative-EV trade loses on average.
Fungibility
Fungibility is what makes tokens usable as money or market shares.
Gas fee
Gas is how blockchain validators are paid. Polymarket pays it in MATIC (Polygon's native token).
Kelly criterion
Kelly sizing maximizes geometric return but creates large drawdowns. Most pros use fractional Kelly (half or quarter).
KYC (Know Your Customer)
KYC is how regulated financial institutions comply with anti-money-laundering rules.
Layer 2
Polygon is a Layer 2 (technically a sidechain/hybrid, but often grouped). Arbitrum, Optimism, and Base are other L2s.
Ledger
Hardware wallets are the gold standard for crypto security. The private key never leaves the device.
Limit order
Limit orders avoid spread cost and give you price control, but may not fill.
Liquidity
More liquidity means tighter spreads, easier entry and exit, and more reliable prices.
Magic link / email login
Email signup on Polymarket uses Magic. It's convenient but not full self-custody.
Market maker
Market makers make markets tradable. Without them, bids and asks would be far apart or nonexistent.
Market order
Market orders are fast but expensive. Limit orders are slow but cheap.
Merge
A holder of 100 YES and 100 NO in the same market can merge them into 100 USDC before resolution.
MetaMask
MetaMask is the canonical way to self-custody on Polymarket.
NO token
NO tokens let you bet against an event happening.
Offramp
Offramps typically charge 1–3% and require KYC for meaningful amounts.
Onramp
The onramp is how you get USDC to trade on Polymarket.
Open interest
Higher open interest means deeper economic activity in a market.
Optimistic oracle
Optimistic oracles are fast and cheap because most answers don't need voting — just a dispute window.
Oracle
An oracle is the mechanism that brings real-world information on-chain to resolve a prediction market. Polymarket uses UMA's optimistic oracle; Kalshi uses centralized human resolution.
Order book
Polymarket and Kalshi both show live order books for each market.
Polygon
Polygon is where Polymarket lives. When you deposit USDC to Polymarket, your USDC sits on Polygon; every trade is a Polygon transaction.
Private key
Your seed phrase encodes your private keys. The key is the thing that actually signs transactions; the seed is how you back it up.
Probability (implied)
If YES is at $0.65, the market thinks the event has a 65% probability.
Resolution
Every market has a resolution date. After the event happens, the oracle reads the outcome and pays out.
Resolution source
Every market should name its resolution source. 'FOMC statement at the meeting release time' is specific. 'What people generally say' is not.
Seed phrase
Lose your seed phrase, lose your wallet. Share it, and whoever you share it with can drain the wallet.
Self-custody
On Polymarket, connecting MetaMask gives you self-custody. Email signup uses a managed (multi-sig) wallet, which is not full self-custody.
Signature (cryptographic)
Every Polymarket trade requires a signature from your wallet. This is what proves you're the one initiating the transaction.
Slippage
Trading size that exceeds market depth moves the price against you.
Split
Market makers split USDC to create inventory they can sell on both sides of the order book.
Spread
The spread is the implicit cost of a round-trip trade. Liquid markets have tight spreads (1–3¢); thin markets have wide spreads (5–15¢).
Stablecoin
Stablecoins let you hold dollar-denominated value on-chain.
Trezor
Like Ledger, Trezor is used via MetaMask on Polymarket.
UMA
UMA stands for Universal Market Access. In the Polymarket context, it's the decentralized answer-providing system.
USDC
USDC is a US-dollar-pegged stablecoin issued by Circle, redeemable 1:1 for USD. Polymarket uses USDC on Polygon as the settlement currency for all trades.
Volume
High volume = deep market. Low volume = thin market.
Wallet
Your wallet is the thing that owns your funds on-chain. Polymarket interacts with your wallet via signatures.
YES token
Every Polymarket market has two tokens: YES and NO. Buying YES is a bet that the event will happen; buying NO is the opposite.