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Polymarket market making means placing bids and asks while managing the inventory created by fills. A displayed spread is potential gross revenue, not guaranteed profit: only one side may execute before fair value moves against you.
A round trip and an adverse-selection example
In a hypothetical market, buy 100 contracts at 48¢ and later sell the same 100 at 52¢. Gross spread revenue is $4 before costs. If you buy at 48¢ and a new fact moves the executable sell price to 40¢, exiting those 100 instead realizes an $8 trading loss before costs. Two $4 winning round trips can be erased by that single adverse fill.
| Scenario | Buy | Sell | Gross result for 100 |
|---|---|---|---|
| Both sides fill | 48¢ | 52¢ | +$4 |
| Price moves against inventory | 48¢ | 40¢ | −$8 |
| Only bid fills | 48¢ | No fill | Unrealized exposure, not booked spread income |
Fees and rewards are different
Polymarket's fee documentation says makers are not charged trading fees while taker parameters vary by market. Rebalancing aggressively can change which side of that fee distinction applies. Rewards and rebates have separate qualifying conditions; do not include them as guaranteed revenue in a backtest.
Prepare an operating checklist
- Check current account eligibility, collateral, approvals and authentication in the official setup instructions.
- Confirm the market accepts orders and inspect tick size and minimum order size.
- Set maximum inventory and maximum order size before quoting.
- Track fills and funds available rather than assuming every quote remains live.
- After disconnecting, reconcile venue orders and positions before placing replacements.
- Define when you stop quoting around scheduled announcements or rule uncertainty.
The current official market-making guide explains setup and order-management workflows. Follow the current SDK references; old tutorials may use obsolete collateral or clients.
Measure the strategy honestly
Keep spread capture, inventory mark-to-market, fees, rebates and infrastructure costs in separate columns. Record missed and partial fills. A simulation that assumes every bid and ask fills instantly makes a passive strategy look better than it is. Report capital tied up and drawdown alongside net profit.
For research before quoting, compare market odds with your thesis and read the API guide. The EV calculator helps examine a directional purchase; it does not simulate queue priority or a market-making strategy.
For the distinct incentive programs, read the liquidity rewards guide and explore the sample score calculator.