The company Polymarket has begun testing the V2 protocol ahead of a preliminary move to it on 2 November for newly created markets. As part of this transition, the CTF Gnosis 2019 market architecture will be replaced with a unified ERC-1155 position system, pUSD collateral, and modular allowances.
Polymarket protocol lead Rajat Alex said on 5 October that "canary" markets will run in real time until 30 October, after which new markets are "tentatively" expected to begin moving to the V2 protocol on 2 November. Existing markets and CTF positions will not be automatically migrated to the new contracts.
In V2, Polymarket has reworked how positions are created
Polymarket's existing market system dates back to the Gnosis conditional token system developed in 2019. As new market formats were introduced, separate adapters and contracts were added for functions such as negative-risk markets, collateral handling, and settlement.
The V2 protocol removes most of that structure. In Polymarket's official code repository, the V2 protocol is described as a "system of smart contracts for a next-generation prediction market," including ERC-1155 position tokens, collateral handling, modular oracles, order matching, and cross-chain functionality.
Position identifiers now encode information, including the module, condition, and outcome, directly into the token ID. The system uses a shared PositionManager contract and a Router, with individual modules handling different market structures.
The initial modules cover binary markets, atomic negative-risk markets, incremental negative-risk markets, and combinatorial markets. In the published Polygon list of Polymarket's deployed modules, the PositionManager, Exchange, Router, and each of these modules are listed as already deployed in mainnet.
The October release should not be confused with Polymarket's earlier CLOB v2 update. As previously reported, the April update changed the exchange contracts, the order-matching mechanism, and collateral, and also introduced pUSD for trading. The V2 protocol changes the position and market infrastructure underlying that trading system.
pUSD becomes the common collateral on V2 markets
In the Polymarket V2 protocol, Polymarket USD, or pUSD, is used as the common collateral asset across all new market modules.
The official contract documentation states that pUSD is an ERC-20 standard token that serves as a wrapper for USDC and USDC.e at a 1:1 ratio, held in an external vault. According to the code, the total amount of USDC and USDC.e held in the vault must equal or exceed the amount of minted pUSD tokens.
The token itself is not new. pUSD appeared alongside the exchange changes in early 2026, but the V2 protocol makes it the common collateral used by the market modules. According to Polymarket's migration guide, existing integrations already using pUSD do not need to replace their collateral setup when adding V2 support.
For developers, positions change. V2 balances are held in the new PositionManager, while splits, merges, and redemptions are performed through the Router. Existing CTF allowances are not carried over, so integrations require new allowances for V2 operations.
Polymarket explicitly tells developers to keep CTF support for older markets and assets. The migration documentation says existing CTF assets are not converted when the V2 protocol is added to an integration.
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