Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
Earlier this year, Odaily Planet Daily compiled an article by data analyst arise titled "Data Modeling: How to Improve the Quality of Polymarket Interactions?".
The core logic of the article is that, considering about 80% of users have never received even $1 in Polymarket liquidity (LP) subsidies, while everyone is frantically competing for trading volume, a more efficient interaction strategy is actually to do everything possible to accumulate LP rewards.
So-called "LP rewards" are real cash subsidies issued by Polymarket to improve the liquidity conditions of its platform for specific prediction markets. All reward details can be viewed in real-time on the official Rewards page (https://polymarket.com/rewards).
Users first need to select an event that has subsidies, then place orders for at least the specified amount (Min Shares) within the specified spread range (Max Spread) to automatically accumulate LP rewards. The closer the order price is to the market price, the higher the efficiency of earning rewards. LP rewards are distributed daily at 8:00 UTC, but only rewards of $1 or more are distributed.
Although the rules for obtaining LP rewards are not complicated, the difficulty of market making in prediction markets is inherently higher (refer to "Only One in Ten Prediction Markets Will Survive Until the End of the Year, Not an Exaggeration"). Coupled with the minimum $1 threshold for daily reward distribution, many ordinary users with limited funds find it difficult to accumulate rewards when trying to operate, and may even suffer capital losses due to inventory risk.
However, right now, Polymarket is providing an excellent opportunity window — with the arrival of the NCAA "March Madness", Polymarket has announced that it will provide $2 million in LP subsidies for related events.
It is important to note that the total amount of LP subsidies Polymarket has distributed for all subsidized events so far is only $13 million. This $2 million+ subsidy will be concentratedly distributed for specific 63 games in less than a month — this directly means an expansion of the subsidy intensity per event, and also represents an excellent opportunity for ordinary users.
Next, Odaily Planet Daily will walk you through the process of market making for NCAA-related events step by step, and briefly mention a few points I think are worth noting.
First, open the Polymarket Rewards page, click on Reward, and you can sort all events by subsidy intensity. It's easy to see that the events with the highest subsidy intensity on Polymarket currently are all NCAA "March Madness" games. (I have been providing liquidity on Polymarket for the past few months and have never seen such a level of subsidy intensity.)
The next most important thing is choosing a pool. It should be added that there is a column called COMP (Competitive) on the right side of Rewards, which indicates the current competition status for providing liquidity in that event. Theoretically, greener is better (representing less competition), but in practice, the competition gap has basically been leveled by professional market making funds, so what you basically see is "three yellow bars", meaning the current competition status is "medium".
Here, it is more recommended to choose games that start later. For example, I chose to put funds into this game between the University of Iowa and the University of Houston on March 19th EST (March 20th Beijing time).
The reason later start times are better is that the trading volume peak for a single sports event on Polymarket often only arrives shortly before the game starts, and Polymarket has already started injecting subsidies. Taking this "University of Iowa vs. University of Houston" game starting the day after tomorrow as an example, the current total trading volume is only $12,000. With a certain liquidity base, lower trading volume often means smaller fluctuations — the chart below clearly shows the probability fluctuation status since Polymarket listed this game. You saw it right, it's a straight line!
Extremely small fluctuations mean users can temporarily avoid "inventory risk", the biggest risk source in market making. Simply put, you don't have to worry too much about the price suddenly moving unilaterally, causing your one-sided orders to be filled while the market price has moved to an unfavorable direction.
After finding a suitable pool (not necessarily this one; I put funds into this one in the morning, you can look for later times), it's time to provide liquidity. Polymarket's liquidity requirements for all NCAA games are a minimum of 1000 shares, with a maximum spread not exceeding ±1¢.
Compared to placing buy orders, it is more recommended to use Polymarket's Split function to split $1000 (the minimum requirement) into equal bilateral shares (which can be reversely minted into $1000 through the Merge function), and then place sell orders on both sides.
As for the specific price points for placing orders, it depends on your own risk appetite. The closer to the market price, the higher the efficiency of earning LP rewards. But still considering inventory risk, I prefer to place orders at the "second best" price level, and then pay attention to price fluctuations, trying to ensure the orders don't get filled — if they are filled, the order amount will no longer meet the requirements, and you will need to consider how to handle the shares on the other side.
Finally, regarding the order cancellation time, it is recommended to cancel the orders about 1 day before the game starts, and then look for later games. If you are interested in continuing, you can repeat the above operation.
Finally, here are the data: I placed the orders around 10:00 in the morning. The probability for this game did not fluctuate at all during this period. Although I said I needed to monitor it, I didn't really do much. As of 17:00, the LP reward I have earned is $4.31 (which will be distributed tomorrow).
The profit is small change, but the key point is to enrich the interaction behavior on Polymarket. Compared to a few days ago, you might have needed to博弈 with the market in relatively low subsidy conditions. Under the current subsidy intensity and event fluctuation conditions, this operation can basically be considered brainless now.
Finally, a quick advertisement: Friends interested in prediction markets are welcome to join our TG chat group for casual discussion anytime: https://t.me/OdailySeer
