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Documentation Index
Fetch the complete documentation index at: https://docs.polymarket.com/llms.txt Use this file to discover all available pages before exploring further.
Positions & Tokens
Understanding outcome tokens and how positions work on Polymarket
Every prediction on Polymarket is represented by outcome tokens. When you trade, you're buying and selling these tokens. Your position is simply your balance of tokens for a given market.
Outcome Tokens
Each market has exactly two outcome tokens:
| Token | Redeems for | If... |
|---|---|---|
| Yes | $1.00 | The event occurs |
| No | $1.00 | The event does not occur |
Tokens are ERC1155 assets on Polygon, using the Gnosis Conditional Token Framework (CTF). This means they're fully onchain and function as standard ERC1155 tokens.
Outcome tokens are always fully backed. Every Yes/No pair in existence is backed by exactly `$1` of pUSD collateral locked in the CTF contract.Split
Convert pUSD into outcome tokens. Splitting $1 creates 1 Yes token and 1 No token.
$100 pUSD → 100 Yes tokens + 100 No tokens
Use this when you want to:
- Create inventory for market making
- Obtain both sides of a market
Trade
Buy or sell tokens on the order book. This is how most users acquire positions.
- Buy Yes at
$0.60→ Pay$0.60, receive 1 Yes token - Sell Yes at
$0.60→ Give up 1 Yes token, receive$0.60
You can sell your position at any time before resolution.
Merge
Convert a complete set of tokens back into pUSD. Merging requires equal amounts of Yes and No tokens.
100 Yes tokens + 100 No tokens → $100 pUSD
Use this when you want to:
- Exit a position without trading
- Convert accumulated tokens back to collateral
Redeem
After a market resolves, exchange winning tokens for pUSD.
| Outcome | Yes tokens | No tokens |
|---|---|---|
| Event occurs | Worth $1 each | Worth $0 |
| Event doesn't occur | Worth $0 | Worth $1 each |
100 winning tokens → $100 pUSD
Position Value
The value of your position depends on the current market price:
Position value = Token balance × Current price
If you hold 100 Yes tokens and Yes is trading at $0.75:
Position value = 100 × $0.75 = $75
Profit and Loss
Your profit depends on how the market resolves compared to your entry price.
Example - Buying Yes at 0.40
| Scenario | Outcome | Return | Profit |
|---|---|---|---|
| Event occurs | Yes wins | $1.00 | +$0.60 per token (150%) |
| Event doesn't occur | No wins | $0.00 | -$0.40 per token (-100%) |
Holding Rewards
Polymarket pays a 4.00% annualized Holding Reward based on your total position value in eligible markets. Your total position value is randomly sampled once each hour, and the reward is distributed daily. The rate is variable and subject to change at Polymarket's discretion.
Example - Selling Before Resolution
You can lock in profits or cut losses by selling before the market resolves:
- Bought Yes at
$0.40 - Price rises to
$0.70 - Sell at
$0.70→ Profit of$0.30per token (75%)