Add scraped Polymarket documentation (117 files)
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Etherdrake
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> ## Documentation Index
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> Fetch the complete documentation index at: https://docs.polymarket.com/llms.txt
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> Use this file to discover all available pages before exploring further.
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# Inventory Management
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> Split, merge, and redeem outcome tokens for market making
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## Overview
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Market makers need to manage their inventory of outcome tokens. This involves:
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1. **Splitting** USDCe into YES/NO tokens to have inventory to quote
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2. **Merging** tokens back to USDCe to reduce exposure
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3. **Redeeming** winning tokens after market resolution
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All these operations use the Conditional Token Framework (CTF) contract, typically via the Relayer Client for gasless execution.
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<Note>
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These examples assume you have initialized a RelayClient. See [Setup](/developers/market-makers/setup) for client initialization.
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</Note>
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## Splitting USDCe into Tokens
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Split 1 USDCe into 1 YES + 1 NO token. This creates inventory for quoting both sides.
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### Via Relayer Client (Recommended)
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```typescript theme={null}
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import { ethers } from "ethers";
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import { Interface } from "ethers/lib/utils";
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import { RelayClient, Transaction } from "@polymarket/builder-relayer-client";
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const CTF_ADDRESS = "0x4d97dcd97ec945f40cf65f87097ace5ea0476045";
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const USDCe_ADDRESS = "0x2791Bca1f2de4661ED88A30C99A7a9449Aa84174";
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const ctfInterface = new Interface([
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"function splitPosition(address collateralToken, bytes32 parentCollectionId, bytes32 conditionId, uint[] partition, uint amount)"
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]);
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// Split $1000 USDCe into YES/NO tokens
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const amount = ethers.utils.parseUnits("1000", 6); // USDCe has 6 decimals
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const splitTx: Transaction = {
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to: CTF_ADDRESS,
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data: ctfInterface.encodeFunctionData("splitPosition", [
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USDCe_ADDRESS, // collateralToken
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ethers.constants.HashZero, // parentCollectionId (null for Polymarket)
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conditionId, // conditionId from market
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[1, 2], // partition: [YES, NO]
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amount
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]),
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value: "0"
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};
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const response = await client.execute([splitTx], "Split USDCe into tokens");
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const result = await response.wait();
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console.log("Split completed:", result?.transactionHash);
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```
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### Result
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After splitting 1000 USDCe:
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* Receive 1000 YES tokens
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* Receive 1000 NO tokens
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* USDCe balance decreases by 1000
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## Merging Tokens to USDCe
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Merge equal amounts of YES + NO tokens back into USDCe. Useful for:
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* Reducing inventory
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* Exiting a market
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* Converting profits to USDCe
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### Via Relayer Client
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```typescript theme={null}
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const ctfInterface = new Interface([
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"function mergePositions(address collateralToken, bytes32 parentCollectionId, bytes32 conditionId, uint[] partition, uint amount)"
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]);
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// Merge 500 YES + 500 NO back to 500 USDCe
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const amount = ethers.utils.parseUnits("500", 6);
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const mergeTx: Transaction = {
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to: CTF_ADDRESS,
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data: ctfInterface.encodeFunctionData("mergePositions", [
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USDCe_ADDRESS,
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ethers.constants.HashZero,
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conditionId,
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[1, 2],
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amount
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]),
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value: "0"
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};
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const response = await client.execute([mergeTx], "Merge tokens to USDCe");
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await response.wait();
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```
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### Result
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After merging 500 of each:
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* YES tokens decrease by 500
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* NO tokens decrease by 500
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* USDCe balance increases by 500
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## Redeeming After Resolution
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After a market resolves, redeem winning tokens for USDCe.
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### Check Resolution Status
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```typescript theme={null}
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// Via CLOB API
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const market = await clobClient.getMarket(conditionId);
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if (market.closed) {
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// Market is resolved
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const winningToken = market.tokens.find(t => t.winner);
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console.log("Winning outcome:", winningToken?.outcome);
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}
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```
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### Redeem Winning Tokens
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```typescript theme={null}
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const ctfInterface = new Interface([
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"function redeemPositions(address collateralToken, bytes32 parentCollectionId, bytes32 conditionId, uint[] indexSets)"
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]);
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const redeemTx: Transaction = {
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to: CTF_ADDRESS,
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data: ctfInterface.encodeFunctionData("redeemPositions", [
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USDCe_ADDRESS,
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ethers.constants.HashZero,
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conditionId,
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[1, 2] // Redeem both YES and NO (only winners pay out)
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]),
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value: "0"
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};
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const response = await client.execute([redeemTx], "Redeem winning tokens");
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await response.wait();
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```
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### Payout
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* If YES wins: Each YES token redeems for \$1 USDCe
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* If NO wins: Each NO token redeems for \$1 USDCe
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* Losing tokens are worthless (redeem for \$0)
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## Negative Risk Markets
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Multi-outcome markets use the Negative Risk CTF Exchange. The split/merge process is similar but uses different contract addresses.
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```typescript theme={null}
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const NEG_RISK_ADAPTER = "0xd91E80cF2E7be2e162c6513ceD06f1dD0dA35296";
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const NEG_RISK_CTF_EXCHANGE = "0xC5d563A36AE78145C45a50134d48A1215220f80a";
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```
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See [Negative Risk Overview](/developers/neg-risk/overview) for details.
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## Inventory Strategies
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### Pre-market Preparation
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Before quoting a market:
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1. Check market metadata via Gamma API
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2. Split sufficient USDCe to cover expected quoting size
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3. Set token approvals if not already done
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### During Trading
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Monitor inventory and adjust:
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* Skew quotes when inventory is imbalanced
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* Merge excess tokens to free up capital
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* Split more when inventory runs low
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### Post-Resolution
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After market closes:
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1. Cancel all open orders
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2. Wait for resolution
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3. Redeem winning tokens
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4. Merge any remaining pairs
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## Batch Operations
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For efficiency, batch multiple operations:
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```typescript theme={null}
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const transactions: Transaction[] = [
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// Split on Market A
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{
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to: CTF_ADDRESS,
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data: ctfInterface.encodeFunctionData("splitPosition", [
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USDCe_ADDRESS,
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ethers.constants.HashZero,
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conditionIdA,
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[1, 2],
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ethers.utils.parseUnits("1000", 6)
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]),
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value: "0"
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},
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// Split on Market B
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{
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to: CTF_ADDRESS,
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data: ctfInterface.encodeFunctionData("splitPosition", [
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USDCe_ADDRESS,
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ethers.constants.HashZero,
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conditionIdB,
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[1, 2],
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ethers.utils.parseUnits("1000", 6)
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]),
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value: "0"
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}
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];
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const response = await client.execute(transactions, "Batch inventory setup");
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await response.wait();
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```
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## Related Documentation
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<CardGroup cols={2}>
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<Card title="CTF Overview" icon="coins" href="/developers/CTF/overview">
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Conditional Token Framework basics
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</Card>
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<Card title="Split Positions" icon="code-branch" href="/developers/CTF/split">
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Detailed split documentation
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</Card>
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<Card title="Merge Positions" icon="code-merge" href="/developers/CTF/merge">
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Detailed merge documentation
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</Card>
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<Card title="Relayer Client" icon="paper-plane" href="/developers/builders/relayer-client">
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Gasless transaction execution
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</Card>
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</CardGroup>
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