Author: Gans Gan
Some time ago, @RicardoPolyGuy mentioned in a live broadcast at "Prediction Tavern" that LP rewards might become an indicator for Polymarket airdrops. Many friends expressed interest in this but were unsure where to start. The challenge lies in how to choose the right market for placing orders. The main purpose of this article is to solve this issue, teaching users how to take matters into their own hands to earn Polymarket wages. 
Maker vs Taker
Before starting operations, it is necessary to understand a few concepts:
Order Book Polymarket supports limit order mode, with buy orders (Bids) and sell orders (Asks) forming the order book. Market makers earn the price difference by placing orders on both sides simultaneously. With an order book, there will be two types of actions: placing orders and taking orders. 
Maker vs Taker
- Maker: Places limit orders and waits for them to be filled. Some markets provide LP rewards for orders within a range. Orders filled in markets like Crypto, NCAAB, and Serie A can receive a commission rebate. For details, see: Maker Rebates Program.
- Taker: Fills orders directly at the market price, taking what is already available, so some markets require paying a fee. Details on fees can be found here: Understanding trading fees on Polymarket
LP Reward Mechanism Polymarket distributes rewards daily to eligible users, with the reward amount related to your order volume, order duration, order price, and other factors. However, the minimum amount distributed is 1U. If you earn less than 1U daily, then your efforts are in vain.
| Factor | Description |
|---|---|
| Order Volume | The larger the order amount, the higher the reward. |
| Order Duration | The longer the duration of the order, the more cumulative rewards. |
| Order Price | The closer the order is to the midpoint price, the higher the reward. |
| Prize Pool Amount | The larger the prize pool, the higher the reward. |
Finding Suitable Markets for Making Markets
Not all markets offer LP rewards and not all markets with LP rewards are worth making markets. Below are my screening criteria that individuals can adjust based on their preferences:
Characteristics of Suitable Markets for Making Markets:
- Have a certain depth in the order book
- Market settlement time is longer (settlement >2 weeks away)
- Avoid markets with significant volatility
- LP rewards greater than 20U
- Moderate or low level of competition
With these rules, how do you find such markets? It can be divided into three steps.
Step 1: Filter by Competition Level
On the surface, the lower the competition, the easier it is to share the profits. Please ignore if the funding amount is high, as too low competition is also not ideal since cheap options often yield poor quality. Therefore, aim for a moderate level of competition. 
Step 2: Look at the Reward Amount
Find areas with moderate competition and then check the reward amount, which is the total daily reward distributed in that market. Generally speaking, markets with a reward pool above $20 are worth participating in; too small a market is limited in absolute returns even if you hold a large share. 
Step 3: Look at Order Thickness
This step directly determines how much you can receive.
Rewards are distributed based on the proportion of your order volume to the total order volume. If the order book is already filled with large orders, your small investment will have its rewards severely diluted. 
Placing Orders
Once you’ve found a suitable market, you can begin placing orders within the specified price range. Effective orders will be represented by a highlighted blue circle indicating they are active; a non-highlighted circle indicates the order is outside the range. 
Note that if the price on one side is below 10 cents, you must place orders on both sides to be considered valid. It is also said that the efficiency of placing orders on both sides is three times that of one side. I haven’t found the specific calculations for this yet. 
Finally, it is not just about placing orders and ignoring them completely; you need to check from time to time whether your orders have been filled. If filled, there will be no rewards, and you might even end up with worthless tokens, so those that have been filled should be sold or merged quickly. If the market becomes too volatile, it is essential to evaluate whether to switch to another market to continue placing orders.
The above is merely a sharing of experiences and may be incorrect; please feel free to correct me. It should not be considered financial advice; market making involves risks, and profits and losses are your own responsibility.
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