A market maker posts a buy order just below the mid-price and a sell order just above. When a taker hits either side, you collect the spread. Polymarket's reward markets pay LP fees on top. Technically: we maintain inventory targets per market, re-quote on book moves, and stop quoting if inventory drifts outside bands.
Quoting is the easy part. Knowing when to stop is the hard part.
Post limit orders at mid ± spread, sized against your inventory target. As fills move you long or short, your quotes shift to attract the offsetting flow.
When the book moves more than your tolerance (default 1%), cancel and re-post. Polymarket's CLOB charges nothing for cancels - but timing matters; you'll get adversely selected if you're slow.
Each market has a max long and max short. Hit the cap, stop quoting that side, let inventory bleed off naturally.
If realized P&L drops below your daily floor, every position gets unwound and the bot sleeps. No 'one more trade'.
Inventory targets and kill-switch are non-negotiable. We refuse to ship without them.
# Market making config - example reward markets strategy: "two-sided-quote" markets: - id: "btc-15m-mar-2026" target_spread_cents: 0.4 inventory_target_usdc: 0 # market-neutral max_long_usdc: 2_500 max_short_usdc: 2_500 re_quote: trigger_book_move_bps: 100 # 1% book move min_interval_seconds: 15 max_quotes_per_minute: 8 risk: daily_pnl_floor_usdc: -300 # kill-switch max_inventory_pct_of_book: 25 # don't be the whole book
On a vanilla market, you're earning the spread minus your inventory cost. On reward markets, Polymarket pays you LP fees on top. The math only works on the latter for most retail-sized deployments.
Informed flow will hit your quote one tick before the market moves against you. Re-quote latency matters. We log per-fill adverse selection and surface it on your dashboard so you can tune.
A small directional bias in fills over days accumulates into a large net position. Inventory caps + scheduled rebalances are the only defense. We bake both in.
If you can't explain why the price is where it is, you'll get picked off. We refuse to ship MM bots on markets we can't write a one-paragraph thesis for.
Reward markets first. Volatile event markets second. Avoid thin books.
5/15/60-minute BTC threshold markets pay LP fees and have constant flow. Our most-deployed strategy.
High-attention markets get tight spreads quickly. MM works pre-event, gets hard near resolution.
ETF approvals, halvings, protocol upgrades. Slow-burn liquidity, occasional volatility spikes - good for patient MM.
Quote one reward market with inventory caps and kill-switch.
Up to 12 markets quoted in parallel, with cross-market hedging.
Tell us your capital, target spread, and which markets you'd like to quote. We'll come back with a backtest and an implementation plan.