Polymarket and Circle announced that the prediction markets platform will replace the bridged USDC (USDC.e) on Polygon with native USDC for all settlement activities. The change aims to improve capital efficiency and align Polymarket’s settlement mechanism with a regulated, directly redeemable dollar instrument.
Polymarket’s move replaces a wrapped token model with natively issued USDC on-chain tokens. According to the announcement, native USDC is issued by Circle’s regulated subsidiaries and is backed by audited reserves, simplifying redemption paths and reducing the structural complexity associated with bridges. This also fosters greater trust in the company thanks to the transparency of Circle’s reserves.
Operationally, native Circle issuance is presented as more capital-efficient. It eliminates bridge fees, reduces latency, and consolidates liquidity on Polygon, enabling faster and more predictable completion for high-volume trading.
Bridged tokens carry additional smart contract and counterparty risks tied to the bridge operator and are vulnerable to exploits and loss-of-parity events. Native USDC, on the other hand, shifts the main security assumptions to the Polygon network and Circle’s operational integrity, eliminating a distinct layer of bridge risk.
A strategic alliance amid a conflicted market
Circle’s native USDC was presented as better aligned with evolving regulatory expectations regarding stablecoin support and consumer protection. Polymarket CEO Shayne Coplan said the partnership was “an important step in strengthening prediction markets,” highlighting the infrastructure and regulatory alignment.
The briefing highlighted market integrity issues that the change doesn’t automatically resolve. Data shows that nearly 25% of Polymarket’s volume over the previous three years appeared to be wash trading, peaking near 60% in late 2024. This pattern can distort metrics and undermine institutional confidence unless genuine on-chain flow increases.
For market participants, the practical implications are straightforward: a settlement that is directly redeemable and regulated reduces a host of operational and legal frictions, making predictable dollar liquidity more accessible to traders and counterparties. For institutions, this clarity supports risk management and compliance assessments.
Outlook: The integration positions Polymarket to offer a cleaner settlement experience, but its success will depend on sustained organic trading in native USDC and demonstrable reductions in artificial volume. If on-chain USDC activity increases, the adjustment could accelerate institutional engagement.
