Author: Nancy, PANews

Recently, news has resurfaced that Polymarket is migrating away from Polygon. Faced with the massive user base of this phenomenal application, several public blockchains are vying for its users. However, Polygon, as the largest stakeholder, has yet to give a direct response to this potential "solo" plan.

With public migration plans announced, public blockchains are collectively extending olive branches.

On April 25th, Josh Stevens, Polymarket's newly appointed VP of DeFi Engineering, revealed that the platform's business growth has significantly exceeded the current infrastructure's capacity. The team is working diligently to push forward a series of major technical upgrades to address pain points in high-frequency trading and improve overall performance and user experience.

Among the various transformation plans, the one that has attracted the most market attention is Polymarket's ongoing "chain migration." "We need larger block space, lower gas costs, and shorter block times to achieve instant settlement." In other words, Polymarket is preparing to switch chains.

Polygon was once the optimal technological solution for Polymarket to enter the prediction market. In the early stages, prediction markets had high requirements for on-chain costs and execution efficiency. At that time, Polygon, with its low transaction fees, faster settlement speed, and relatively mature EVM ecosystem, became the most suitable deployment choice.

However, as Polymarket's platform trading volume continued to climb, especially after the surge in demand for high-frequency trading, multiple problems gradually emerged, including increased transaction latency, poor order cancellation experience, and decreased execution efficiency during system congestion. For Polymarket, these issues have directly impacted user retention and trading activity.

For example, PANews previously published an analysis pointing out that attackers exploited the time difference between Polymarket's off-chain matching and on-chain settlement to repeatedly create transaction failures at extremely low cost, thereby clearing market maker orders and arbitrage. A single address could even profit tens of thousands of dollars a day, while the attack cost was negligible. This vulnerability in the mechanism directly leads to market makers and automated trading bots on the platform facing multiple blows, including forced order removal, passive exposure of positions, and even direct losses.

As of now, no official solution has been provided. Although the community has developed monitoring and early warning tools, these are essentially patch-based defenses and cannot fundamentally solve this architectural problem. Therefore, only by redesigning the matching and settlement mechanism at a deeper level can the risk of such attacks be eliminated at its core.

In a sense, Polygon, which once helped Polymarket take off, is now gradually becoming the ceiling for its continued expansion.

This isn't the first time migration rumors have surfaced. As early as the end of last year, reports circulated that the team had discussed launching their own L2 server on the Discord community and gradually migrating it out of Polygon. Now, Josh Stevens' public statement is seen by outsiders as the plan moving from internal discussions to the implementation phase.

Following the announcement, Sui, Solana, Sonic, Algorand, Sei, and others extended offers to Polymarket, citing reasons such as lower fees, faster transaction confirmation times, high throughput and performance, and friendly support for transaction-intensive applications.

For these public blockchains, successfully hosting a phenomenal application like Polymarket would mean far more than just adding a new project. It would directly bring massive amounts of real transaction traffic, increased active users, and a significant boost in ecosystem awareness. Especially given the current scarcity of mainstream applications, such opportunities are rare.

Supporting half of Polygon's business, or perhaps inclined to build its own L2 platform.

For Polygon, once the Polymarket migration plan is actually implemented, it could result in a massive loss of revenue at the ecosystem level.

Currently, Polymarket has become Polygon's most important traffic portal and core economic engine.

According to data from Dune, Polymarket now contributes 56.3% of Polygon's transaction fees based on the latest daily fee breakdown. For every $100 in fees generated by Polygon, approximately $56 comes from Polymarket. This means that Polymarket is the core source driving Polygon's overall chain revenue growth.

Looking at a longer timeframe, Polymarket has contributed approximately $72.9 million in transaction fees so far this year, accounting for 61.3% of Polygon's total transaction fee revenue (approximately $119 million).

In other words, Polymarket has become the single largest source of growth for Polygon. If an ecosystem relies on a single leading application in the long term, its loss often results not only in a decline in revenue, but could also impact the overall ecosystem's activity and market confidence.

Polygon has not yet officially responded to Polymarket's statement regarding its migration plans. However, according to TheStreet Roundtable, citing sources, Polygon is working with Polymarket to resolve existing issues, and Polymarket has not communicated any blockchain migration plans to Polygon.

Currently, Polymarket has not disclosed where it will migrate to, but the market generally speculates that Polymarket is more likely to build its own Layer 2 than to migrate directly to other public chains. As for whether it will adopt OP Stack or other solutions such as Polygon CDK, further information is still pending.

According to crypto KOL Blue Fox's analysis, Polymarket has at least three advantages if choosing to build its own blockchain: First, it can fully control the block space, block generation speed, and gas fees, allowing for targeted optimization for prediction markets and future Perps (perpetual contracts) scenarios, achieving low latency, high throughput, and low cost; Second, it does not need to compete for resources with other dApps, and it is also more conducive to regulatory compliance arrangements, especially compliance requirements related to the CFTC; Third, there are already application chains such as Lighter in the market as reference samples.

He further pointed out that Polymarket is unlikely to choose Solana, Base, or Arbitrum. Solana's advantages are speed and low cost, but Polymarket is based on Ethereum, and migration costs are high in terms of contract architecture, ecosystem compatibility, and USDC asset transfer. Currently, it mainly supports SOL deposit bridging and shows no signs of migrating. As for L2 blockchains like Base and Arbitrum, they may serve as part of multi-chain expansion in the future, but they are unlikely to be the primary platform.

Polymarket undergoes a complete upgrade and trading system rebuild.

In addition to the blockchain migration, Polymarket has also launched a comprehensive upgrade covering products, infrastructure, organization, and funding to optimize the trading experience and prepare for further business expansion.

For example, at the product level, Polymarket is optimizing its website, focusing on improving page loading speed, response efficiency, and overall user experience. Simultaneously, the team plans to release a unified TypeScript SDK, integrating all existing APIs. In the future, developers will only need a single WebSocket connection to access core functionalities, significantly lowering the barrier for external teams to integrate with Polymarket and facilitating faster growth for its ecosystem tools and third-party applications.

In terms of business expansion, Polymarket has confirmed the launch of a perpetual contract product, which will adopt a brand-new smart contract architecture and be equipped with a backend system built from scratch in Rust. This means that the platform is further transforming from a single prediction market into a comprehensive on-chain trading platform.

At the organizational level, Polymarket has initiated recruitment for key positions, including QA automation lead, development tools lead, internal tools lead, and data engineering lead. The team has also been restructured into a smaller, more focused model with clearer responsibilities to improve execution efficiency and accountability.

In terms of security, Polymarket stated that it is currently collaborating daily with four security teams to ensure system security and user fund security.

Of all the upgrades, the most critical is that the team is rebuilding the Central Limit Order Book (CLOB) from scratch. The team believes that the existing matching system can no longer handle the platform's continuously growing trading demand, and the new CLOB architecture paves the way for future perpetual contracts and more financial products.

Josh Stevens admitted that the company's current engineering capabilities have not kept pace with its business growth, and that this has indeed disappointed users in the past. He pledged to continue making significant improvements in the coming months and to release weekly engineering progress updates starting next Friday to increase transparency and rebuild market confidence.

Meanwhile, Polymarket will undergo another upgrade on April 28. This upgrade includes launching the new smart contract CTF Exchange V2, restructuring the order book system, and migrating collateral assets from USDC.e to the new collateral token Polymarket USD (pUSD).

USDC.e is Circle's bridged version of USDC on Polygon. Historical attacks have demonstrated that this type of asset has a long-standing risk of cross-chain bridging. For prediction markets with high-frequency, high-volume fund flows, this is a significant hidden danger.

In contrast, pUSD is an ERC-20 token issued by Polymarket and fully backed by real USDC at a 1:1 ratio. After migrating to pUSD, Polymarket not only reduces systemic risk but also gains control over minting, redemption, reserve utilization, and settlement logic, significantly improving capital efficiency. According to a previous post by Defillama founder 0xngmi, Polymarket users hold approximately $1.25 billion in their wallets; if they retained this interest income, they could earn an additional $54 million annually at current interest rates.

In addition, the proprietary stablecoin structure helps reduce the gray areas of asset compliance, paving the way for opening up the US market or attracting institutional funds.

As prediction markets truly become mainstream, they will no longer be limited to on-chain users, but will cater to a wider range of ordinary users. For Polymarket, the immediate needs are system stability, settlement reliability, and improved user experience. Simultaneously, as competition in the prediction market intensifies, Polymarket also needs to find a more stable and diversified revenue structure.