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Prediction Markets101

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.

Prediction Markets 101 editorial team Updated April 16, 2026 2 min read

Definition

USDC (USD Coin) is a regulated, cash-backed stablecoin issued by Circle. Each USDC is redeemable 1:1 for one US dollar. It's the primary settlement currency on Polymarket.

How it works

When you deposit on Polymarket, your funds are held as USDC on the Polygon blockchain. A $100 balance is literally 100 USDC tokens in your wallet, each worth $1.

Circle maintains USDC's 1:1 peg by holding equivalent USD and US Treasury reserves at major US banks. Reserves are audited monthly. You can redeem USDC for USD through Circle (institutional only) or via exchanges that support it (retail).

Why Polymarket uses it

  • Price stability. Prediction market shares are quoted 0–1, mapping to cents. You can't do this with a volatile token.
  • Regulatory clarity. USDC is one of the most compliant stablecoins globally.
  • Onramp ubiquity. Every major exchange supports USDC.
  • Dollar familiarity. Users think in dollars; USDC is literally digital dollars.

USDC vs other stablecoins

  • USDT (Tether): Larger by market cap but less regulated. Polymarket doesn't use it.
  • DAI: Crypto-collateralized stablecoin. More decentralized but has peg fluctuations.
  • BUSD: Binance's stablecoin, largely discontinued.

USDC's combination of regulatory compliance, deep liquidity, and Circle's reputation make it the clear choice for a prediction market settling in a dollar peg.

Network considerations

Polymarket uses USDC on the Polygon network specifically. USDC exists on Ethereum, Arbitrum, Optimism, Solana, and many other chains. Each version is a separate token — Polygon USDC is not interchangeable with Ethereum USDC without bridging.

For deposits to Polymarket, ensure you're sending USDC on Polygon.

The March 2023 depeg incident

USDC briefly depegged during the March 2023 Silicon Valley Bank collapse. Circle had ~$3.3B deposited at SVB; for about 48 hours, USDC traded as low as $0.87 on secondary markets.

When Treasury and FDIC announced SVB deposit protections, USDC's peg restored within hours. No holder lost funds. The incident is cited as a stress test USDC passed.

See also