Liquidity providers deposit funds into Polymarket and receive trading fees from traders (supply-side fees). Polymarket has also launched a new peer-to-peer order book with no liquidity providers involved.

Polymarket is a non-custodial prediction market protocol built on Polygon. Polymarket was founded by Shayne Coplan and launched in 2020.

Polymarket team & investors own and govern the protocol. They do not currently take a cut of the total trading fees paid by traders (revenue). Polymarket's investors include Polychain, 1Confirmation, ParaFi Capital, etc.

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Prediction markets

Polymarket

# Polymarket Expenses Methodology

## 1. Overview

The total operational costs incurred by Polymarket International to maintain its prediction market ecosystem are measured by Expenses. The value of asset incentives and rebates distributed to users to encourage market liquidity and platform usage is captured by this metric. These costs are represented as the protocol's investment in user acquisition and market depth, specifically through the distribution of USDC and pUSD rewards and rebates to participants.

## 2. Data sources

- **Blockchain events**: ERC-20 `Transfer` events from reward and rebate distribution contracts, covering Polygon
- **External data**: End-of-day price feeds and asset metadata

## 3. Step-by-step calculation

### Component A: Reward distribution identification

- **Purpose**: USDC and pUSD outflows from official Polymarket International reward distribution programs are identified.
- **Logic**: ERC-20 `Transfer` events are parsed from the Polygon blockchain. Transfers are filtered to include only those originating from the Liquidity Rewards and Holding Rewards distribution addresses. Transfers of USDC and pUSD assets are included, while transfers returning unspent balances to the protocol wallet are excluded.
- **Key fields**: `from_address` (sender identification), `to_address` (recipient identification), `token_address` (asset identification), `value` (transfer quantity).

### Component B: Rebate distribution identification

- **Purpose**: USDC and pUSD outflows from official Polymarket International maker rebate distribution programs are identified.
- **Logic**: ERC-20 `Transfer` events are parsed from the Polygon blockchain. Transfers are filtered to include only those originating from the Maker Rebates distribution addresses. Transfers of USDC and pUSD assets are included, while transfers returning unspent balances to the protocol wallet are excluded.
- **Key fields**: `from_address` (sender identification), `to_address` (recipient identification), `token_address` (asset identification), `value` (transfer quantity).

### Component C: USD conversion and normalization

- **Purpose**: Reward and rebate values are normalized and converted to USD.
- **Logic**: Daily reward and rebate amounts are normalized by decimal precision. The normalized amounts are multiplied by end-of-day price feeds for the respective assets to calculate the USD value. Daily totals are calculated using UTC day boundaries.
- **Key fields**: `timestamp` (daily granularity), `token_address` (asset identification), `amount` (summed transfer values).

### Component D: Final expenses aggregation

- **Purpose**: The final Expenses metric is aggregated from the combined USD values of rewards and rebates.
- **Logic**: The USD-denominated values of asset incentives (rewards) and cost of revenue (rebates) are summed by day. Zero-filling is applied for days where no distributions are recorded.
- **Key fields**: `timestamp` (daily granularity), `expenses` (final USD value).

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Total project operating and incentive expenses.

Polymarket

Expenses

Expenses

Competitive landscape

Chain breakdown