| name | Prediction Market Making |
| description | Liquidity provision on Polymarket — spread optimization, quadratic reward maximization, adverse selection defense via real-time WebSocket monitoring, two-sided quoting with inventory management |
| version | 1.0 |
| format | completion-engine |
| workflows | 3 |
| source | MES 3.0 Deep Extraction — Polymarket docs + poly-maker + polymarket-agents + polymarket-arbitrage + ecosystem analysis (5 sources, 5,200 lines) |
Prediction Market Making
Polymarket distributes $5M+/month in liquidity rewards via a quadratic scoring formula: S(v,s) = ((v-s)/v)^2 * b. This skill turns that reward pool into systematic income through two-sided quoting, adverse selection defense, and reward score optimization. The quadratic structure means a 1-cent quoter earns 3.24x the reward of a 5-cent quoter — small spread improvements yield exponential gains. Two-sided quoting earns 3x vs single-sided (c=3.0 divisor penalty). The poly-maker author confirms the bot is "unprofitable" — adverse selection destroys spread capture. Only the rewards program makes market making viable. Every workflow optimizes around that reality.
Core Principle: Reward harvesting is the business model, not spread capture. The ImMike config sets mm_enabled: false with the comment "markets too efficient." Without the rewards layer, you are paying infrastructure costs to lose money to informed traders.
Available Workflows
| # | Workflow | Produces | Use When |
|---|
| market-select | Market Selection & Spread Design | Market ranking by reward pool/competition + optimal spread parameters + deployment config | Choosing which markets to quote, how much capital to allocate, what spreads to post |
| adverse-defense | Adverse Selection Defense | Complete defense system: news monitoring, auto-cancel/widen rules, inventory thresholds, heartbeat management, kill switch config | Building the protection layer that makes profitable market making possible |
| reward-optimize | Reward Optimization | Full Q chain calculation, spread/size tuning, reward vs adverse selection trade-off modeling, per-market tuning recommendations | Maximizing share of the $5M+/month reward pool after basic infrastructure is running |
Quick Reference
Reward Formula
- Score:
S(v,s) = ((v-s)/v)^2 * b — quadratic, tighter is exponentially better
- Two-sided boost: Q_min uses
max(min(Q_one, Q_two), max(Q_one/c, Q_two/c)) where c=3.0
- Extreme midpoints (<0.10 or >0.90): strict
min(Q_one, Q_two) — no c=3.0 safety net
- Q chain: Q_one -> Q_two -> Q_min -> Q_normal -> Q_epoch -> Q_final
- Sampling: 10,080 one-minute samples per weekly epoch, minimum payout $1
- Distribution: Daily at midnight UTC
Reward Pools (April 2026)
| Sport | Pool/Game | Notes |
|---|
| Champions League QF | $24,000 | Highest pool, 3-day window |
| EPL | $10,000 | Weekend-heavy |
| NBA | $7,700 | Frequent events, high adverse selection |
| CS2 A-Tier | $5,500 | Lighter competition |
| IPL Cricket | $4,500 | Emerging market |
| UFC Main Card | $4,250 | Short event window |
| MLB | $1,650 | Low pool, skip unless competition minimal |
| NHL | $1,500 | Low pool |
Infrastructure
- CLOB REST:
https://clob.polymarket.com
- Market WS:
wss://ws-subscriptions-clob.polymarket.com/ws/market
- User WS:
wss://ws-subscriptions-clob.polymarket.com/ws/user
- Sports WS:
wss://sports-api.polymarket.com/ws
- RTDS WS:
wss://ws-live-data.polymarket.com
- Auth: EIP-712 (L1) -> HMAC-SHA256 (L2), Signature Type 2 (GNOSIS_SAFE)
- Fees: Makers 0%, takers 1.5% (crypto) / 0.3% (sports). Fee formula:
fee = C * feeRate * p * (1-p)
- Heartbeat: 10-second window with 5-second buffer. Miss = ALL orders cancelled.
- Rate limits: POST /order 3,500/10s burst; POST /orders (batch, 15/req) 1,000/10s = 15,000 effective; DELETE /order 3,000/10s; DELETE /cancel-all 250/10s
- Tuesday restart: 7:00 AM ET, ~90s downtime, HTTP 425 (Too Early)
- Post-Only orders: Guaranteed maker status (0% fees), rejected if would cross spread
- GTD minimum: 60 seconds (
expiration = now + 60 + N)
Smart Contracts (Polygon)
| Contract | Address |
|---|
| CTF Exchange | 0x4bFb41d5B3570DeFd03C39a9A4D8dE6Bd8B8982E |
| Neg Risk CTF Exchange | 0xC5d563A36AE78145C45a50134d48A1215220f80a |
| Neg Risk Adapter | 0xd91E80cF2E7be2e162c6513ceD06f1dD0dA35296 |
| Conditional Tokens (CTF) | 0x4D97DCd97eC945f40cF65F87097ACe5EA0476045 |
| USDC.e | 0x2791Bca1f2de4661ED88A30C99A7a9449Aa84174 |
| UMA Adapter | 0x6A9D222616C90FcA5754cd1333cFD9b7fb6a4F74 |
| UMA Optimistic Oracle | 0xCB1822859cEF82Cd2Eb4E6276C7916e692995130 |
| Gnosis Safe Factory | 0xaacfeea03eb1561c4e67d661e40682bd20e3541b |
| Polymarket Proxy Factory | 0xaB45c5A4B0c941a2F231C04C3f49182e1A254052 |
Risk Management Defaults (ImMike config)
maker_fee_bps: 0 / taker_fee_bps: 150estimated_gas_per_order: 0.02 (~$0.02 on Polygon)slippage_tolerance: 0.02 (2% for arb, use 1% for market making)max_retries: 3 / retry_delay_seconds: 1heartbeat_interval: 30 (bot internal, NOT Polymarket heartbeat)mm_enabled: false — "markets too efficient"
Genius Context
Full extraction intelligence: genius.md — 21 patterns, 13 hidden knowledge items, 7 signature moves, quality rubric, worked examples, API details
Execution Prompts (structure-pure v2)
3 deterministic practitioner prompts — each carries an Output Contract, Output Skeleton, and Quality Gate. When a deliverable matches one, Read it and honor its contract instead of improvising the output shape.
- Polymarket Market Maker — Adverse Selection Defense Configuration —
skills/prediction-market-making/references/prompts-v2/adverse-selection-defense-config.md
- Polymarket Market Maker — Market Selection & Deployment Plan —
skills/prediction-market-making/references/prompts-v2/market-selection-deployment-plan.md
- Polymarket Market Maker — Reward Optimization Tuning Report —
skills/prediction-market-making/references/prompts-v2/reward-optimization-tuning-report.md
