At the date of writing there is an active prediction market asking if Trump will be president of the USA on the 31st of March, 2021. The odds are 0.98/0.02.
If I understand right both Polymarket and Omen have 2% trading fees. I would expect that at two percent trading fees there’s not any profit to be made on 0.98/0.02 odds.
I don’t know about Omen, but on Polymarket you can mostly avoid this issue by minting a complete set of shares and selling the cheaper side. In your example this would only cost you $0.0004 in fees to acquire shares at $0.98. The easiest way I know of to mint complete shares is to add and then immediately remove liquidity
The fees are always 2% of the transaction value; i.e. numShares*avgPrice. The trick I described lets you substitute (1-avgPrice) when that would be cheaper . I should’ve been much clearer about this initially; I forgot that most people here probably don’t know the polymarket fee structure.
If I understand right both Polymarket and Omen have 2% trading fees. I would expect that at two percent trading fees there’s not any profit to be made on 0.98/0.02 odds.
I don’t know about Omen, but on Polymarket you can mostly avoid this issue by minting a complete set of shares and selling the cheaper side. In your example this would only cost you $0.0004 in fees to acquire shares at $0.98. The easiest way I know of to mint complete shares is to add and then immediately remove liquidity
What are the limits of this technique to avoid fees of polymarket? Why doesn’t everyone do it and pay no fees?
You still pay fees, they’re just lower. Most sharps on polymarket do indeed do this
How high are the fees in that case?
The fees are always 2% of the transaction value; i.e. numShares*avgPrice. The trick I described lets you substitute (1-avgPrice) when that would be cheaper . I should’ve been much clearer about this initially; I forgot that most people here probably don’t know the polymarket fee structure.
That’s a good point. I’lll update the post to mention it. There is another trump market offering 5% (so 3% after the fees) but it’s far smaller. https://polymarket.com/market/will-donald-trump-be-president-of-the-usa-on-may-31-2021