Arbitrage on Polymarket

Arbitrage on Polymarket is different from normal crypto exchange arbitrage because you’re trading probability contracts (YES/NO shares) instead of spot tokens. Since you’re already building bots and working with Polymarket APIs, I’ll explain this in a practical, implementation-ready way. 🔵 1️⃣ How Polymarket Pricing Works On Polymarket: Each outcome trades between $0.00 and $1.00 YES price + NO price ≈ 1.00 At resolution: Winning side = $1 Losing side = $0 If total implied probabilities ≠ 1, arbitrage exists. 🔥 2️⃣ Core Arbitrage Strategies ✅ A) YES + NO Imbalance (Same Market Arbitrage) If: YES = 0.48 NO = 0.47 Total = 0.95 You can buy both: 0.48 + 0.47 = 0.95 Guaranteed payout = 1.00 Profit = 0.05 (5%) This is risk-free if both fill fully. ⚠️ Reality: This rarely stays open long You must: Execute simultaneously Avoid partial fills Account for fees ✅ B) Multi-Outcome Market Arbitrage Example: 3-candidate election Candidate Price A 0.40 B 0.35 C 0.20 Total = 0.95 → Arbitrage exists Buy