From 100% Rebate to 20%: The Game Behind Polymarket's Fee Adjustment

Author: DFarm

First, let's summarize the timeline of recent events related to Polymarket fees.

1. Polymarket suddenly announced that it will charge a fee for 15-minute cryptocurrency price prediction trades, but the fee will be fully refunded to the market maker (limit order) trader.

2. The handling fee has been changed from being fully refunded to being partially refunded.

3. The 100% handling fee refund will cease on the 11th. From the 12th to the 18th, a 20% handling fee refund will be provided.

Why are handling fees charged?

We all know that Polymarket previously did not charge any fees for any basic transactions, so why is it charging fees only for the 15-minute cryptocurrency market this time?

This requires explaining what a "delayed arbitrage" robot is.

In a market with a very short timeframe of 15 minutes, the outcome is determined by the prices on various exchanges.

Without transaction fees, high-frequency trading bots can take advantage of millisecond-level time differences to place orders and profit before Polymarket prices have had time to update.

For example, if the probability of BTC rising (UP) is currently 90% on Polymarket within 15 minutes, and suddenly the price of BTC on the exchange drops by 5%, the bot will immediately buy cheap DOWN (downward) shares after detecting this. After that, other bots or traders will gradually buy in to raise the price, at which point the bot can profit and exit.

What are the consequences of this behavior? Market makers are constantly being exploited by these high-frequency bots, so they are naturally unwilling to continue placing orders and providing liquidity in this market, ultimately leading to a decrease in liquidity in the 15-minute cryptocurrency market.

Therefore, the official introduced a transaction fee mechanism at this time, especially with the highest transaction fee when the odds are 50:50 (as shown in the figure). This directly caused the arbitrage costs of many robots to exceed their profits, so these robots would naturally shut down.

Why subsidize market making?

As mentioned earlier, market makers had previously lost too much money, so in order to retain them, the platform will share the transaction fees with those who place orders (market makers).

Why was the subsidy reduced from 100% to 20%?

The detail lies in this sentence: "20% handling fee will be refunded from the 12th to the 18th." This sentence tells us that the refund percentage after the 18th is yet to be determined.

When the platform initially introduced transaction fees, market makers were unsure whether it could deter bots. This is why the platform returns 100% of the transaction fees to market makers, covering their risk and ensuring liquidity.

Why are we only returning 20% now? Let's look at the data first:

After the transaction fees were enabled, the total transaction fees dropped by half. What does this mean? It means that many high-frequency trading bots have indeed been shut down.

If the official system sees that the robot has left and the market maker's risk has decreased, then they may not need to offer a 100% commission refund anymore; they'll offer 20% first to see how the data goes.

That's why we first tried a 20% fee rebate for a week, observed the data performance, and then determined the rebate percentage for the rest of the program.

In fact, all of this is about balancing the interests of market makers, bots, and ordinary traders.

"Money Printing Machine" Robot

Polymarket has too many markets that are essentially "money-printing machines," and very few people in the market truly know how they do it.

The most popular one should be an article by X user @the_smart_ape:

This article has already garnered nearly 2 million views, and many people have put the strategies in it into practice, with some indeed profiting.

But just a few days later, the transaction fees were announced, and many people missed out on making money again…

So, have all the "money printing machines" disappeared? No, those interested can take a look at the following examples of "money printing machines":

If you can crack their strategy, your "money printing machine" won't be far off. But remember, don't tell anyone else, but you can secretly tell me.

at last

In fact, on Polymarket, since there are no third-party commissions or fees, we are all betting against each other. Therefore, as a platform, their responsibility is to provide a fair opportunity for both sides to compete.

Players who enjoy PVP games know that absolute fairness does not exist; the only way to achieve fairness is through iterations version by version.

This also shows us that there really is a "money-printing machine" on Polymarket, which is all about technology and strategy.

If this article was helpful to you, please share it. Thank you.

If you're new to Polymarket, be sure to check out this article → "A Comprehensive Guide: How to Get Started with Polymarket with Zero Learning Barriers (Including Anti-Ban & Low-Waste Deposit and Withdrawal Strategies)"