Maker-rebate strategies on Polymarket — earning from the spread

Definition

Maker-rebate strategies on prediction markets exploit the asymmetry between taker fees (paid by the order that removes liquidity) and maker rebates (earned by orders that add liquidity to the CLOB). On Polymarket, the taker fee for crypto binaries peaks at 1.56% notional at p=0.50. The maker fee is 0% — and in active markets, Polymarket pays a small rebate to resting orders that get filled.

The core thesis is simple: if you have a view on a market but are not in a hurry, post a limit order at your target price and wait for the market to come to you. You pay no fee on fill and collect a rebate on top. The contrarian bot implements this by targeting outcomes priced 20-50 cents with GTC bids, expecting reversion or resolution to $1.00.

When it works

Stable or mean-reverting markets. A market priced at $0.35 that oscillates between $0.30 and $0.40 without trending to resolution is ideal. Your GTC bid at $0.30 fills on dips and you exit via another GTC ask at $0.40. Round-trip fee: 0% plus two small rebates.

Low urgency, high conviction. Maker orders require patience. If you need to exit immediately, you become a taker. The strategy degrades to breakeven (at best) if you enter as maker but exit as taker — you gave up queue priority and paid the exit fee.

Wide bid-ask spreads. If the best bid is $0.28 and best ask is $0.38, posting a bid at $0.32 earns the spread. In very liquid markets where the spread is $0.01, there is almost no opportunity to post inside the spread profitably.

Directional outcomes with delayed certainty. Election markets, sports outcomes with known result times, and weather events all fit: the correct outcome eventually trades at $0.99 or higher. GTC bids on the correct outcome at $0.25-$0.45 earn full $1.00 at resolution minus entry cost minus zero fees.

When it fails

Adverse selection against informed takers. The counterparty to your resting bid is often a better-informed taker. If the oracle or news flow has already moved and you have a stale GTC order on the book at $0.40 when fair value is now $0.25, you will be picked off. Every fill on a maker order is a potential adverse selection event — the taker chose to hit you for a reason.

Market dies without resolution. Some Polymarket markets go illiquid before resolution. Your GTC order sits unfilled or partially filled. Capital is tied up earning nothing. You eventually cancel but the opportunity cost is real.

Rebates are smaller than they look. Polymarket's rebate schedule is not published in precise numbers, and it varies by market type and liquidity program participation. Rebates typically add 0.02-0.05 cents per share — meaningful on large size, negligible on small. Do not build a strategy that depends on rebate income rather than treating it as a bonus.

Queue position degrades. CLOB queues are FIFO. Early orders get filled first. If you cancel and repost (chasing the market), you lose queue position and are more likely to be filled only during adverse conditions.

Fee math

The contrast between maker and taker is most visible at mid-price. At p=0.50 for 100 shares:

# Taker fee at p=0.50 (worst case — mid-market entry) taker_fee = shares * 0.25 * price * (price * (1 - price))^2 = 100 * 0.25 * 0.50 * (0.50 * 0.50)^2 = 25 * 0.50 * 0.0625 = $0.78 fee on a $50 position = 1.56% of notional

The same trade as a maker costs nothing in fees and earns approximately:

# Maker rebate (approximate, varies by market) maker_rebate ≈ shares * 0.0003 (roughly 0.03 cents per share) = 100 * 0.0003 = $0.03 credit

The breakeven spread between maker and taker strategies is therefore:

breakeven_price_improvement = taker_fee / shares = $0.78 / 100 = $0.0078 per share

Meaning: if a maker order gets filled 0.78 cents worse on average than the taker price would be (e.g., takers lift your ask before the market moves in your favor), the strategies are equivalent. In practice the maker must accept worse fills in exchange for fee savings, so the net advantage depends entirely on whether your limit prices get adversely selected.

At wings (p=0.20), fees are much lower:

taker_fee = 100 * 0.25 * 0.20 * (0.20 * 0.80)^2 = 25 * 0.20 * 0.0256 = $0.128 fee on a $20 position = 0.64% of notional

Wing strategies pay less fee whether taker or maker, but maker is still free.

Real-world examples

The contrarian bot is directly inspired by a documented strategy from the wallet 0x7c3db7... ("Car"), who accumulated over $22K net PnL posting GTC bids on Polymarket underdogs. The playbook: find markets priced 20-45 cents where public sentiment is overly pessimistic, post a GTC bid at or slightly below mid, wait for a fill, and hold to resolution or a recovery exit.

Concretely: a 2026 US political prop market showing a third-party candidate at $0.22. The candidate has a structural floor above $0.15 (ballot access confirmed, polling 8%). Car posts a GTC bid for 500 shares at $0.20 — below mid, catching dip-sellers. Fill happens 3 hours later. Market resolves at $0.30 (candidate finishes third, above zero). Exit at $0.29 via GTC ask. Math:

Entry: 500 shares * $0.20 = $100 outlay, $0.00 fee Exit: 500 shares * $0.29 = $145 proceeds, $0.00 fee Gross: $45 profit on $100 capital = 45% return Net: $45 + ~$0.15 rebate = $45.15

Compare to entering as taker at $0.22 and exiting as taker at $0.27:

Entry: 500 * $0.22 = $110, fee = 500 * 0.25 * 0.22 * (0.22 * 0.78)^2 ≈ $0.29 Exit: 500 * $0.27 = $135, fee = 500 * 0.25 * 0.27 * (0.27 * 0.73)^2 ≈ $0.49 Gross: $25 profit - $0.78 fees = $24.22

The maker approach captured more of the price move (entered lower, exited higher) and paid zero fees. The taker approach required less patience but left significant profit on the table.

Common variants

Pure liquidity provision (symmetric MM): Post both a bid and an ask inside the spread, collecting the spread on each fill. Requires constant repricing as the market moves. Most viable on deep, actively traded markets where fill rate is high.

Directional GTC accumulation: Post GTC bids only on the outcome you believe will resolve $1.00. No ask until near resolution. Hold through volatility. This is the contrarian bot's primary mode.

GTC + momentum exit: Enter as maker on dips, exit as taker on momentum spikes. Accepts the taker fee on exit in exchange for faster, more reliable exit during favorable moves. Net fee is taker_fee_exit only (entry was free).

Cross-outcome MM on NegRisk markets: On NegRisk multi-outcome markets, post maker bids on two or more mutually exclusive outcomes simultaneously. If both fill, the sum of entry prices must be below $1.00 or you've created an arb-losing position. NegRisk mechanics mean the payouts net differently than standard binary YES/NO — read the contract before using this variant.

Rebate stacking on illiquid markets: Post the only resting order on a new market. Collect rebate on every taker fill. Risk is maximal adverse selection since you are providing liquidity to informed participants.

Bots implementing this strategy

contrarian is the primary maker-rebate implementation. It places GTC limit orders on Polymarket outcomes in the 20-50 cent range, targeting underdog outcomes where public sentiment creates a persistent discount. The bot runs in a polling loop, posts bids at computed limit prices, tracks open orders via the CLOB API, and monitors for fills and resolution events. Maker rebates are credited automatically by Polymarket on settlement.