Prediction Markets

What Are Prediction Markets

Prediction markets let you bet on the outcome of real-world events: elections, sports results, crypto milestones, and more. You're not just speculating — you're trading outcome shares that represent the market's collective belief about what will happen.

Seashail integrates with Polymarket, the largest prediction market platform, which operates on Polygon using a CLOB (Central Limit Order Book) model.

How it works:

• Each event has 2 or more possible outcomes (for example, "Yes" and "No")
• Each outcome has shares priced between $0.00 and $1.00
• A "Yes" share at $0.60 means the market prices the event at 60% probability
• If the event resolves in your favor, your shares pay out $1.00 each
• If it resolves against you, your shares are worth $0.00

How Polymarket Works

Polymarket uses a CLOB (Central Limit Order Book) — the same order matching system used by traditional stock exchanges. This is different from automated market makers (AMMs) used by most DeFi protocols.

Key concepts:

• You place limit orders at a specific price (for example, "buy 100 shares at $0.55")
• Orders sit in the orderbook until a counterparty matches them
• You can view the orderbook depth to see current bids and asks
• Each outcome has a unique token_id — this is what you use when placing orders

All Polymarket trading happens on Polygon (EVM). You need:

• A Polygon wallet address
• USDC on Polygon for trading (bridge or swap to get USDC on Polygon)

See Bridging Guide for moving USDC to Polygon.

Finding Markets

Seashail provides two tools for market discovery:

Searching Markets

Use search_prediction_markets to search for events by keyword:

{
  "query": "Bitcoin 100k",
  "limit": 10,
  "include_closed": false
}

The response includes:

• Event titles and market questions
• Outcomes with their token_id values
• Current prices for each outcome
• Market status (open/closed)

Viewing Orderbooks

Use get_prediction_orderbook with a token_id to see current bids and asks:

{
  "token_id": "1234567890"
}

The response shows:

• Current bid and ask prices
• Size (liquidity) at each price level
• Mid-price

This helps you understand market depth before placing an order.

Both tools are read-only — no policy approval needed.

Placing Predictions

Use place_prediction to place a CLOB order on Polymarket.

Required parameters:

• token_id — the outcome token ID (from search results)
• side — "buy" or "sell"
• chain — "polygon" (or "polygon-amoy" for testing)

Order types:

Limit Orders (default)

Specify exact price and size:

{
  "chain": "polygon",
  "token_id": "1234567890",
  "side": "buy",
  "order_kind": "limit",
  "price": "0.55",
  "size": "100",
  "time_in_force": "gtc"
}

This places a limit buy order for 100 shares at $0.55 per share, good-til-canceled (GTC).

Time-in-force options:

• gtc — good-til-canceled (default)
• gtd — good-til-date
• fok — fill-or-kill (execute completely or cancel)
• fak — fill-and-kill (execute what's possible, cancel remainder)

Market Orders

Execute immediately at current market price:

{
  "chain": "polygon",
  "token_id": "1234567890",
  "side": "buy",
  "order_kind": "market",
  "amount_usdc": "50"
}

This buys $50 USDC worth of shares at the current best available price.

Policy Approval

Prediction orders are subject to policy evaluation:

• Treated as write operations (same as swaps or sends)
• Transaction value checked against max_usd_per_tx and daily caps
• Tiered approval applies (may be auto-approved, require confirmation, or be blocked)

See Policy and Approvals for how tiered approval works.

Typical Workflow

1. Search markets: search_prediction_markets
2. Check orderbook depth: get_prediction_orderbook
3. Place order: place_prediction
4. Confirm if prompted (via MCP elicitation)
5. Check positions: get_prediction_positions

Closing Positions

Use close_prediction to cancel an existing CLOB order:

{
  "chain": "polygon",
  "order_id": "0xabcdef123456"
}

The order_id is returned when you place an order with place_prediction.

Note: This cancels an open order. To sell outcome shares you already hold, use place_prediction with side: "sell".

Tracking Positions

Use get_prediction_positions to see all your open prediction positions:

{
  "chain": "polygon"
}

The response shows:

• Market title and outcome
• Number of shares held
• Average entry price
• Current market price
• Unrealized profit/loss in USD

This is a read-only operation using the Polymarket Data API (no key required).

Risk Considerations

Binary Outcomes

Prediction markets are binary: if the event resolves against you, you lose your entire position. Unlike traditional trading where you might lose a percentage, prediction markets can result in 100% loss.

Illiquidity

Some markets have thin orderbooks. Large orders may not fill completely, or may move the price significantly. Always check orderbook depth before placing large orders.

Resolution Disputes

Event resolution depends on oracle data. Disputed resolutions can delay payouts or (rarely) result in market invalidation. Resolution rules vary by market.

USDC Exposure

All Polymarket trading is denominated in USDC on Polygon. You're exposed to:

• USDC depeg risk (stablecoin risk)
• Polygon network risk
• Bridge risk when moving USDC to Polygon

Policy Safeguards

Use policy controls to limit exposure:

• Set conservative max_usd_per_tx limits for predictions
• Use max_usd_per_day to cap daily prediction spending
• Monitor positions regularly with get_prediction_positions

Notes

• For exact parameter details: Prediction Market Tools Reference
• Trading requires USDC on Polygon — bridge or swap to get USDC on Polygon first
• Related: Bridging Guide for moving USDC to Polygon
• Polymarket CLOB requires HTTPS or localhost (enforced by Polymarket API)
• The Polymarket Gamma API (market search) and Data API (positions) are keyless
• Order placement and cancellation use the Polymarket CLOB API (signed locally)

See Also

• Troubleshooting for solutions to policy errors and CLOB order issues
• Glossary for definitions of write op, CLOB, and token_id