To date, Polymarket traders have made millions trading everything from Turkish elections to Indian Cricket. In this article we explore three proven and relatively simple strategies that can help you get started making money on Polymarket.
Polymarket’s markets often have analogs on Betfair and Smarkets. These shared markets include many major political markets like the 2023 Turkish Presidential Election Winner and the 2024 United States Democratic/Republican Presidential Nominees. At the time of writing you can trade Joe Biden to win the Democratic Nominee for 78.7/81.3 on Smarkets, 75.8/76.9 on Betfair and 80.0/83.0 on Poymarket. Considering the current fee rates (2% of net winnings for Smarkets, 5% of net winnings for Betfair, 0% on Polymarket) and even at a time of very low volatility, there is at least some room for arbitrage. During more volatile times the spreads between venues can be sizable and thus quite profitable. Arb trading has never been easier anon.
Everyone loves a good longshot, especially casinos. The favourite-longshot bias is a well documented phenomenon where “on average, bettors tend to overvalue “longshots" and relatively undervalue favourites”. Taking the opposite side of these over-zealous bettors can prove mathematically favorable. Normally, it’s the house that capture this inefficiency, but on Polymarket there is no house. All trades happen peer to peer therefore traders looking to place longshot bets need counterparties. Lot’s of bets on Polymarket can be considered long shots, and taking the other side of these bets has been coined “buying bonds”. One of the most popular categories of “bonds” on Polymarket are Trump bonds. For example, at the time of writing you can buy 30,000 NO shares for Trump being President of the United states on July 31st 2023 (10 weeks away) for 97.5c each which figures to ~13% APR on USDC. This rate is more competitive than Aave and Compound. All hail Polymarket, the new yield protocol king…
Polymarket has a liquidity mining program that rewards traders (market makers) for placing limit orders on markets. All a trader has to do is post a limit order on a qualifying market within the spread cutoff and over the size threshold and they will start earning points Blur-style. Each week (epoch) rewards are distributed to traders who participated and scored. Specific qualities like two-sided quoting, and quote tightness earn more points. A great way for a trader to get started on Polymarket is to do a deep dive on a reward markets with large spreads and become the primary quoter for the market therefore capturing a majority of the market’s rewards. For the chess nerds - if you have an opinion on the odds of Ian Nepomniachtchi winning this month’s Superbet Chess Classic you can get paid to place orders right now. Recent UI improvements make participating in the liquidity mining program easier than ever. The rewards page has been simplified, reward tags improved and rewarded ranges are now highlighted within the order book.