183 lines
7.2 KiB
Markdown
183 lines
7.2 KiB
Markdown
> ## Documentation Index
|
|
> Fetch the complete documentation index at: https://docs.polymarket.com/llms.txt
|
|
> Use this file to discover all available pages before exploring further.
|
|
|
|
# Liquidity Rewards
|
|
|
|
> Earn rewards for providing liquidity on Polymarket
|
|
|
|
By posting resting limit orders, liquidity providers (makers) are automatically eligible for Polymarket's incentive program. Rewards are distributed directly to maker addresses daily at midnight UTC.
|
|
|
|
The program is designed to:
|
|
|
|
* Catalyze liquidity across all markets
|
|
* Encourage liquidity throughout a market's entire lifecycle
|
|
* Motivate passive, balanced quoting tight to a market's midpoint
|
|
* Encourage trading activity
|
|
* Discourage blatantly exploitative behaviors
|
|
|
|
<Note>
|
|
The minimum reward payout is **\$1**; amounts below this will not be paid.
|
|
</Note>
|
|
|
|
<Tip>
|
|
Both `min_incentive_size` and `max_incentive_spread` can be fetched alongside
|
|
full market objects via the CLOB API and [Markets
|
|
API](/market-data/fetching-markets). Reward allocations for an epoch can also
|
|
be fetched via the Markets API.
|
|
</Tip>
|
|
|
|
***
|
|
|
|
## Methodology
|
|
|
|
Liquidity providers are rewarded based on a formula that rewards participation in markets, boosts two-sided depth (single-sided orders still score), and tighter spread vs the size-cutoff-adjusted midpoint. Each market configures a max spread and min size cutoff within which orders are considered. The average of rewards earned is determined by the relative share of each participant's Q<sub>n</sub> in market m.
|
|
|
|
### Variables
|
|
|
|
| Variable | Description |
|
|
| -------------- | ---------------------------------------------------------------- |
|
|
| S | Order position scoring function |
|
|
| v | Max spread from midpoint (in cents) |
|
|
| s | Spread from size-cutoff-adjusted midpoint |
|
|
| b | In-game multiplier |
|
|
| m | Market |
|
|
| m' | Market complement (i.e. NO if m = YES) |
|
|
| n | Trader index |
|
|
| u | Sample index |
|
|
| c | Scaling factor (currently 3.0 on all markets) |
|
|
| Q<sub>ne</sub> | Point total for book one for a sample |
|
|
| Q<sub>no</sub> | Point total for book two for a sample |
|
|
| Spread% | Distance from midpoint (bps or relative) for order n in market m |
|
|
| BidSize | Share-denominated quantity of bid |
|
|
| AskSize | Share-denominated quantity of ask |
|
|
|
|
***
|
|
|
|
## Equations
|
|
|
|
### 1. Order Scoring Function
|
|
|
|
Quadratic scoring rule for an order based on position between the adjusted midpoint and the minimum qualifying spread:
|
|
|
|
$S(v,s)= (\frac{v-s}{v})^2 \cdot b$
|
|
|
|
### 2. First Market Side Score
|
|
|
|
$Q_{one}= S(v,Spread_{m_1}) \cdot BidSize_{m_1} + S(v,Spread_{m_2}) \cdot BidSize_{m_2} + \dots $
|
|
$ + S(v, Spread_{m^\prime_1}) \cdot AskSize_{m^\prime_1} + S(v, Spread_{m^\prime_2}) \cdot AskSize_{m^\prime_2}$
|
|
|
|
### 3. Second Market Side Score
|
|
|
|
$Q_{two}= S(v,Spread_{m_1}) \cdot AskSize_{m_1} + S(v,Spread_{m_2}) \cdot AskSize_{m_2} + \dots $
|
|
$ + S(v, Spread_{m^\prime_1}) \cdot BidSize_{m^\prime_1} + S(v, Spread_{m^\prime_2}) \cdot BidSize_{m^\prime_2}$
|
|
|
|
### 4. Minimum Score
|
|
|
|
Boosts two-sided liquidity by taking the minimum of Q<sub>ne</sub> and Q<sub>no</sub>, while still rewarding single-sided liquidity at a reduced rate (divided by c).
|
|
|
|
**If midpoint is in range \[0.10, 0.90]** — single-sided liquidity can score:
|
|
|
|
$Q_{\min} = \max(\min({Q_{one}, Q_{two}}), \max(Q_{one}/c, Q_{two}/c))$
|
|
|
|
**If midpoint is in range \[0, 0.10) or (0.90, 1.0]** — liquidity must be double-sided to score:
|
|
|
|
$Q_{\min} = \min({Q_{one}, Q_{two}})$
|
|
|
|
### 5. Normalized Score
|
|
|
|
Q<sub>min</sub> of a market maker divided by the sum of all Q<sub>min</sub> across market makers in a given sample:
|
|
|
|
$Q_{normal} = \frac{Q_{min}}{\sum_{n=1}^{N}{(Q_{min})_n}}$
|
|
|
|
### 6. Epoch Score
|
|
|
|
Sum of all Q<sub>normal</sub> for a trader across all samples in an epoch:
|
|
|
|
$Q_{epoch} = \sum_{u=1}^{10,080}{(Q_{normal})_u}$
|
|
|
|
### 7. Final Score
|
|
|
|
Normalizes Q<sub>epoch</sub> by dividing by the sum of all market makers' Q<sub>epoch</sub> in a given epoch. This value is multiplied by the rewards available for the market to get a trader's reward:
|
|
|
|
$Q_{final}=\frac{Q_{epoch}}{\sum_{n=1}^{N}{(Q_{epoch})_n}}$
|
|
|
|
***
|
|
|
|
## Worked Example
|
|
|
|
Assume an adjusted market midpoint of 0.50 and a max spread config of 3 cents for both m and m'.
|
|
|
|
### Step 2 - First Side Score
|
|
|
|
A trader has the following open orders:
|
|
|
|
* 100Q bid on m @ 0.49 (spread = 1 cent)
|
|
* 200Q bid on m @ 0.48 (spread = 2 cents)
|
|
* 100Q ask on m' @ 0.51 (spread = 1 cent)
|
|
|
|
$$
|
|
Q_{ne} = \left( \frac{(3-1)}{3} \right)^2 \cdot 100 + \left( \frac{(3-2)}{3} \right)^2 \cdot 200 + \left( \frac{(3-1)}{3} \right)^2 \cdot 100
|
|
$$
|
|
|
|
Q<sub>ne</sub> is calculated every minute using random sampling.
|
|
|
|
### Step 3 - Second Side Score
|
|
|
|
The same trader also has:
|
|
|
|
* 100Q bid on m @ 0.485 (spread = 1.5 cents)
|
|
* 100Q bid on m' @ 0.48 (spread = 2 cents)
|
|
* 200Q ask on m' @ 0.505 (spread = 0.5 cents)
|
|
|
|
$$
|
|
Q_{no} = \left( \frac{(3-1.5)}{3} \right)^2 \cdot 100 + \left( \frac{(3-2)}{3} \right)^2 \cdot 100 + \left( \frac{(3-.5)}{3} \right)^2 \cdot 200
|
|
$$
|
|
|
|
Q<sub>no</sub> is calculated every minute using random sampling.
|
|
|
|
### Steps 4-7
|
|
|
|
4. Take the minimum of Q<sub>ne</sub> and Q<sub>no</sub> (with single-sided adjustment if midpoint is in \[0.10, 0.90])
|
|
5. Normalize against all other market makers in the sample
|
|
6. Sum across all 10,080 samples in the epoch
|
|
7. Normalize again to get final reward share
|
|
|
|
***
|
|
|
|
## World Cup 2026 — Liquidity Incentive Program
|
|
|
|
Polymarket is distributing liquidity incentives for World Cup 2026 markets from June 11 through July 19, 2026. Rewards are split into **Pre** (pre-game) and **Live** (in-play) periods per game.
|
|
|
|
<Note>
|
|
The values below are configured reward caps. Actual payouts depend on eligible
|
|
quoting and the reward methodology above.
|
|
</Note>
|
|
|
|
### Stage Pools
|
|
|
|
| Stage | Pre \$/Game | Live \$/Game | Total \$/Game |
|
|
| --------------------- | ----------- | ------------ | ------------- |
|
|
| Group Stage | \$2,139 | \$3,971 | \$6,110 |
|
|
| Group Stage — Marquee | \$3,754 | \$6,971 | \$10,725 |
|
|
| Round of 32 | \$4,778 | \$8,872 | \$13,650 |
|
|
| Round of 16 | \$6,370 | \$11,830 | \$18,200 |
|
|
| Quarterfinals | \$9,442 | \$17,533 | \$26,975 |
|
|
| Semifinals | \$13,423 | \$24,927 | \$38,350 |
|
|
| Third Place | \$5,460 | \$10,140 | \$15,600 |
|
|
| Final | \$18,200 | \$33,800 | \$52,000 |
|
|
|
|
***
|
|
|
|
## Next Steps
|
|
|
|
<CardGroup cols={2}>
|
|
<Card title="Trading" icon="chart-line" href="/market-makers/trading">
|
|
Order entry and quoting best practices
|
|
</Card>
|
|
|
|
<Card title="Maker Rebates" icon="receipt" href="/market-makers/maker-rebates">
|
|
Earn USDC rebates on eligible crypto and sports markets
|
|
</Card>
|
|
</CardGroup>
|