Market making on Polymarket: how to quote bid and ask, capture the spread, earn maker rebates (20-25% of taker fees), inventory risk math, and when MM works on prediction markets.
Market making on Polymarket: how to quote bid and ask, capture the spread, earn maker rebates (20-25% of taker fees), inventory risk math, and when MM works on prediction markets.
By Harley Young, lead writer at Polymarkets.co.il. Last reviewed: May 2026.
What this chapter covers
This is chapter 13 of our 32-part series on building a Polymarket trading bot. We cover the topic in depth across the sections below. Body content for each section is being written and rolled out chapter-by-chapter; FAQ answers and references are already complete and reflect production experience from running our own trader.
Market making in plain English
The spread + rebate edge
Inventory risk and skew
When MM works on Polymarket (and when not]
Code skeleton: quote both sides at +/- N cents
Adjusting quotes on news flow
Killing the bot when adverse selection spikes
Market making in plain English
This section is in active development. Want to be notified when it goes live? Contact us or watch the authors page.
The spread + rebate edge
This section is in active development. Want to be notified when it goes live? Contact us or watch the authors page.
Inventory risk and skew
This section is in active development. Want to be notified when it goes live? Contact us or watch the authors page.
When MM works on Polymarket (and when not]
This section is in active development. Want to be notified when it goes live? Contact us or watch the authors page.
Code skeleton: quote both sides at +/- N cents
This section is in active development. Want to be notified when it goes live? Contact us or watch the authors page.
Adjusting quotes on news flow
This section is in active development. Want to be notified when it goes live? Contact us or watch the authors page.
Killing the bot when adverse selection spikes
This section is in active development. Want to be notified when it goes live? Contact us or watch the authors page.
Frequently asked questions
Can a retail bot really make money market-making on Polymarket?
Sometimes, in select markets. The maker rebate (20-25% of taker fees) plus a 1-3 cent spread per round trip can compound to a real return. But on Polymarket, news flow can move a market 20+ cents in seconds - a market maker without a fast news feed gets adversely selected. Best for liquid sports markets pre-game and during low-news periods.
How wide should I quote on Polymarket?
At minimum, the spread you need to cover the worst expected adverse-selection. For liquid sports/politics: 1-3 cents per side off mid. For thin markets: 5+ cents. If you cannot quote tight enough to compete with other makers but wide enough to survive moves, the market is not market-makeable for you.
What inventory limits should I set?
Hard cap inventory per market at 50-200 USD until you have proven profitability over months. Skew quotes to encourage inventory toward neutral - if you accumulate Yes, lower your Yes bid and lower your No ask to encourage No buys back. Never let a single market hold 20%+ of your bankroll.
Do I need a fast VPS to market-make Polymarket?
Yes. Market making is the most latency-sensitive Polymarket strategy. A jittery VPS results in stale quotes that get picked off. We use TradingVPS for our MM bots specifically because the jitter is consistently low. Commodity cloud (DO/Vultr) works for paper trading MM but not live.
How is Polymarket MM different from crypto MM?
Two big differences: (1) Polymarket has hard outcome events (news, sports finales) that can move the price 30-100 cents instantaneously - much sharper than crypto. (2) Polymarket markets eventually resolve, so unlike crypto pairs, MM positions have a hard expiration. Both push you toward shorter holds and tighter risk limits.
Can I market-make 5-minute crypto markets on Polymarket?
Possible but very hard. The 5-minute markets see ~288 expirations per day per pair, are dominated by faster bots, and have tighter spreads. Most retail MM bots lose money there to adverse selection. Cover the 5-minute crypto strategy properly in chapter 23 of this series.
Вопросы и ответы
Can a retail bot really make money market-making on Polymarket?
Sometimes, in select markets. The maker rebate (20-25% of taker fees) plus a 1-3 cent spread per round trip can compound to a real return. But on Polymarket, news flow can move a market 20+ cents in seconds - a market maker without a fast news feed gets adversely selected. Best for liquid sports markets pre-game and during low-news periods.
How wide should I quote on Polymarket?
At minimum, the spread you need to cover the worst expected adverse-selection. For liquid sports/politics: 1-3 cents per side off mid. For thin markets: 5+ cents. If you cannot quote tight enough to compete with other makers but wide enough to survive moves, the market is not market-makeable for you.
What inventory limits should I set?
Hard cap inventory per market at 50-200 USD until you have proven profitability over months. Skew quotes to encourage inventory toward neutral - if you accumulate Yes, lower your Yes bid and lower your No ask to encourage No buys back. Never let a single market hold 20%+ of your bankroll.
Do I need a fast VPS to market-make Polymarket?
Yes. Market making is the most latency-sensitive Polymarket strategy. A jittery VPS results in stale quotes that get picked off. We use TradingVPS for our MM bots specifically because the jitter is consistently low. Commodity cloud (DO/Vultr) works for paper trading MM but not live.
How is Polymarket MM different from crypto MM?
Two big differences: (1) Polymarket has hard outcome events (news, sports finales) that can move the price 30-100 cents instantaneously - much sharper than crypto. (2) Polymarket markets eventually resolve, so unlike crypto pairs, MM positions have a hard expiration. Both push you toward shorter holds and tighter risk limits.
Can I market-make 5-minute crypto markets on Polymarket?
Possible but very hard. The 5-minute markets see ~288 expirations per day per pair, are dominated by faster bots, and have tighter spreads. Most retail MM bots lose money there to adverse selection. Cover the 5-minute crypto strategy properly in chapter 23 of this series.
