polymarket-trading-bot (Ladder Bot)

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A Python liquidity-maker bot for Polymarket 5m / 15m / 1h / 4h / 1d crypto Up/Down markets (Polymarket Trading Ladder bot).

This bot does not speculate on market direction. Instead, it captures spread by selling both YES and NO outcome tokens at prices whose combined value exceeds $1. The strategy focuses on market making, not directional trading.

Overview

Polymarket trading bot is designed to provide automated liquidity in Polymarket prediction markets.

Bot Workflow

🔄 Polymarket Bot Workflow

1. Split collateral Divide USDC into YES/NO outcome tokens. 2. Pair selling Sell both YES and NO tokens simultaneously. 3. Market resolution Wait until the prediction market resolves. 4. Redeem Redeem the winning tokens for collateral.

Profit is generated from spread capture, where the bot sells both outcomes at prices that sum to greater than $1.

Strategy Concept

When a market is created on Polymarket:

• YES token = pays $1 if event happens

• NO token = pays $1 if event does not happen

The bot:

Converts USDC.e into YES + NO tokens

Sells both tokens

Ensures the sum of prices ≥ target spread

Example:

Token	Sell Price
YES	0.54
NO	0.49

Total received:

0.54 + 0.49 = 1.03

Cost to create pair:

1.00

Profit before fees:

1.03 - 1.00 = 0.03 per pair

Typical range:

Total received ≈ 1.03 – 1.10

After the market resolves:

• One token becomes $1
• The other becomes $0

The bot redeems the winning token.

---

Strategy Flow

The bot runs a state machine cycle:

IDLE
  ↓
SPLIT
  ↓
PAIR_SELL
  ↓
MONITOR
  ↓
REDEEM
  ↓
IDLE

Phase Explanation

Phase	Description
SPLIT	Convert USDC.e into YES and NO tokens
PAIR_SELL	Sell YES and NO tokens in sequential pairs
MONITOR	Wait for market resolution
REDEEM	Redeem winning tokens for USDC.e

---

Pair Selling Logic

The bot sells tokens in pairs rather than all at once.

### For every pair: 1. Fetch orderbook 2. Read best bid prices 3. Compute optimal sell prices 4. Place YES and NO limit orders 5. Wait until both fill 6. Retry if timeout occurs

---

Dynamic Pricing

Sell prices are calculated using:

yes_price = best_bid_yes + spread
no_price  = best_bid_no  + spread

Then the bot enforces:

yes_price + no_price ≥ min_pair_sum

Example configuration:

best_bid_yes = 0.49
best_bid_no  = 0.50
spread       = 0.01

Calculated:

yes_price = 0.50
no_price  = 0.51
sum = 1.01

If min_pair_sum = 1.03, the bot increases both prices proportionally.

If running continuously

Markets	Cycles per hour	Hourly Profit
1 market (5m)	12	~$36
2 markets	12	~$72
4 markets	12	~$144

polymarket-trading-ladder-bot
│
├── config
│   ├── default.yaml
│   └── paper.yaml
│
├── src/polybot5m
│
│   ├── cli.py
│   ├── config.py
│   ├── constants.py
│   ├── engine.py
│
│   ├── data
│   │   ├── gamma.py
│   │   └── slug_builder.py
│
│   └── execution
│       ├── clob_client.py
│       ├── executor.py
│       ├── split.py
│       └── redeem.py
│
└── exports
    └── liquidity_maker_activity.json

---

Configuration

Main configuration file:

config/default.yaml

Example:

liquidity_maker:
  portfolio_allocation_usdc: 100

  pair_size: 5
  min_pair_sum: 1.03

  price_follow_spread: 0.01

  pair_sell_timeout_seconds: 300
  order_check_interval_seconds: 5

  redeem_delay_seconds: 10
  stagger_delay_seconds: 2

---

Important Parameters

Parameter	Description
portfolio_allocation_usdc	USDC used per market cycle
pair_size	Shares per YES/NO pair
min_pair_sum	Minimum combined sell price
price_follow_spread	Price offset above best bid
pair_sell_timeout_seconds	Cancel orders if not filled
order_check_interval_seconds	Poll order status

---

Supported Markets

Designed for short-term Polymarket crypto markets:

Asset	5m	15m	1h	4h	1d
BTC	✅	✅	✅	✅	✅
ETH	✅	✅	✅	✅	✅
SOL	✅	✅	✅	✅	✅
XRP	✅	✅	✅	✅	✅

Slug format:

{symbol}-updown-{interval}-{epoch_timestamp}

Example:

btc-updown-5m-1709916600

---

Run Modes

Paper Trading (Recommended First)

Uses real orderbook data but no real trades.

polybot5m -c config/paper.yaml run

or

polybot5m run --dry-run

---

Live Trading

Example:

polybot5m run --cycles 1 --allocation 10

Meaning:

• run one cycle
• allocate $10 per market

---

Custom Run

polybot5m run \
  --allocation 500 \
  --cycles 5

---

Environment Variables

Required for live trading.

PRIVATE_KEY=
FUNDER=

API_KEY=
API_SECRET=
API_PASSPHRASE=

Optional builder relayer keys:

BUILDER_API_KEY_1=
BUILDER_API_SECRET_1=
BUILDER_API_PASSPHRASE_1=

Multiple keys can be used to avoid rate limits.

---

Activity Logs

Trading activity is exported to:

exports/liquidity_maker_activity.json

Example record:

{
  "market": "btc-updown-5m",
  "action": "pair_sell",
  "yes_price": 0.52,
  "no_price": 0.51,
  "size": 5,
  "timestamp": 1709916600
}

---

Summary

Feature	Description
Strategy	Liquidity market making
Profit source	Spread capture
Market type	Polymarket 5m / 15m / 1h / 4h / 1d crypto
Language	Python / Rust
APIs	Gamma API + CLOB API
Execution	Builder Relayer

---