Glossary: Prediction Markets and Polymarket

Prediction market

A prediction market is a platform where people trade on the outcome of future events — elections, economic data, sports, anything resolvable. Instead of betting against a bookmaker, traders trade with each other by buying and selling shares tied to outcomes. Prices reflect the market's collective probability estimate. If a "Yes" share trades at $0.70, the market is implying a 70% chance of that outcome.

Example: in October 2024, Polymarket priced Trump's election win at 60% while major polling averages showed a near coin flip. The market resolved correctly.

Polymarket

Polymarket is the largest prediction market platform in the world, where users trade real-world event outcomes using cryptocurrency. It runs on the Polygon blockchain and uses USDC for all transactions. As of 2025, more than $27 billion has been traded on the platform, which is regulated by the CFTC in the United States.

Polymarket gained mainstream attention during the 2024 US election cycle, when its prediction prices were widely cited by media outlets alongside traditional polls.

Outcome share (Yes/No share)

An outcome share represents one side of a prediction — typically "Yes" or "No." Each share settles at $1 if correct and $0 if not. If a "Yes" share is priced at $0.67, traders are implying a 67% probability of the event occurring. Traders profit by buying low and selling high, or by holding winning shares until the market resolves.

Market resolution

Market resolution is the process of determining a prediction market's final outcome. After the event occurs, the market is settled based on predefined rules. On Polymarket, resolution is handled by oracles using reliable data sources, with a UMA token-holder voting mechanism for disputed cases. Once resolved, winning shares pay out $1 and losing shares become worthless.

Liquidity

Liquidity is how easily you can buy or sell shares without significantly moving the price. High liquidity means tight spreads between buy and sell prices, plenty of active traders, and clean execution. Low liquidity means wider spreads and slower fills. On Polymarket, liquidity is provided by market makers and active traders, and tends to concentrate on high-attention markets.

On-chain trading

On-chain trading means every transaction is recorded on a public blockchain. This makes trades transparent and verifiable by anyone — you can see who traded, when, at what price, and at what size. There is no centralized intermediary holding the data. Polyscout is built directly on top of this transparency.

USDC

USDC is a stablecoin pegged 1:1 to the US dollar. Polymarket uses USDC as the base currency for all trades, settlements, and payouts. This keeps prices stable and easy to read in dollar terms, while allowing fast and low-cost transactions on the Polygon network.

Polygon

Polygon is a Layer 2 blockchain network built on top of Ethereum. It offers fast confirmations and very low transaction fees — fractions of a cent — which makes frequent prediction market trading economically viable. Polymarket uses Polygon for this reason, while remaining compatible with standard Ethereum wallets like MetaMask.

Wallet address

A wallet address is a public blockchain identifier — a string like 0x1a2b…3c4d — that ties together everything a trader has ever done on Polymarket. Anyone can look up a wallet's complete history: trades, positions, volumes, PnL. The address itself reveals nothing about the person behind it unless they've publicly linked it to their identity.

Position

A position is a trader's current exposure in a specific market. It includes the number of shares held, the average entry price, and the current value at market price. Positions can be on the "Yes" side or the "No" side. Tracking positions across multiple traders is one of the clearest ways to understand where conviction is forming.

PnL (Profit and Loss)

PnL measures how much a trader has gained or lost. It combines realized PnL (from closed positions) with unrealized PnL (from open positions at current market prices). It's the most direct measure of trader performance and the primary metric Polyscout uses to rank the leaderboard.

Whale

A whale is a trader making unusually large trades relative to the rest of the market. Whales often move prices, signal strong conviction, or front-run news the rest of the market hasn't priced in. Watching whale activity is one of the main reasons traders use tools like Polyscout.

On Polymarket, individual whale trades during the 2024 election ran into seven figures and frequently moved the headline price by several cents within minutes.

Watchlist

A watchlist is a custom list of traders or wallets you choose to follow inside Polyscout. Adding a trader to your watchlist enables push notifications on their large trades, position changes, and exits. It's how you focus the firehose of Polymarket activity down to the wallets you actually care about.

Smart money

Smart money refers to traders who have consistently outperformed over time — not lucky once, but profitable repeatedly. The premise of "following smart money" is that these traders have better information, better judgment, or both. Polyscout helps surface smart-money wallets through PnL and volume rankings, but following them is observational, not automated.

Following smart money doesn't guarantee returns. Even consistently profitable traders take losses, change strategies, or fail to repeat.