Original Author:shtanga0x&securezer0

Compiled | Odaily Planet Daily (@OdailyChina)

Translator | Wenser (@wenser2010)

Editor's Note: Recently, on the X platform timeline, Polymarket's posts regarding LP incentives for NCAA "March Madness" have almost taken over. At the same time, Polymarket official members revealed that a major announcement will be made next Monday, leading the community to speculate it could be related to funding or token issuance.

After the US SEC and CFTC cleared the airdrop obstacles for cryptocurrency platforms through a five-point system, POLY has become the "last hope" for many, while LP market-making may become one of the key indicators for airdrops.

In light of this, Odaily Planet Daily will provide a more comprehensive perspective for Polymarket users based on the positive and negative views of two analysts regarding LP market-making incentives. The following is the compiled content, with some information edited.

Positive Viewpoint: Four Major Categories Behind the Polymarket LP Incentive Program

Recently, Polymarket's incentive mechanism has undergone a low-key upgrade, shifting its focus toward liquidity providers (LP). For the past few years, the platform has implemented a "zero trading fee" strategy, but since the beginning of this year, it has quietly introduced fees for specific betting events while launching two major market maker reward programs.

On the surface, the collection of trading fees seems disadvantageous to trading users, but in reality, it addresses the most critical structural pain point of prediction markets——the liquidity challenge.

The new fee structure aims to fund incentive projects, rewarding users who provide limit orders and maintain order depth. As a result, both Polymarket and its users benefit from narrower spreads, a richer order book, and a better trading experience——especially in the high-frequency cryptocurrency market.

The pathway it promotes is clear and shows a trend from singular to diverse:

• January 2026: 15-minute Crypto market
• February 2026: Expands to 5-minute Crypto market + NCAAB college basketball + Serie A football
• March 6, 2026: Expands to all Crypto markets (covering events such as 1H, 4H, daily, weekly, etc.)

Based on the above information, this article will provide a detailed explanation of how the new fees and reward systems work——and why the fees paid + rewards earned may become potential anti-manipulation indicators in POLY airdrops. This is not a simple monetization operation; Polymarket is showing through actions that it truly values liquidity, not just volume bots.

Part I. Comprehensive Analysis of the New Taker Fee Mechanism

The vast majority of Polymarket markets remain completely free. Deposits, withdrawals, and transactions (for most event markets) still have zero platform fees.

Trading fees currently apply only to the taker order side, covering three categories of markets:

• All Crypto up and down markets (15min, 5min, 1H, 4H, daily, weekly, etc.)
• NCAAB (US College Basketball League)
• Serie A (Italian Football)

The key point is that the taker fee only takes effect for markets created after the fee activation date, and previously existing betting events are not affected.

The fee formula is standardized (where C=number of trading tokens, p=token price/market probability, fees rounded to four decimal places, with a minimum fee of0.0001 USDC):

The effective fee rate follows the symmetric probability curve:

• When the probability is close to 50% (highest result uncertainty), the fee is highest;
• When the probability is close to 0 or 1 (higher result certainty), the fee approaches 0.

For example, in a $100 Crypto market trade:

• p=0.50 → trading fee is about $0.44;
• p=0.10 or 0.90 → trading fee is about $0.02.

The probability curve for sports events is similar, but with slightly higher fees at midpoints (around 50% probability), the charging direction is specific:

• Buying: fees deducted from token shares;
• Selling: fees deducted from USDC funds;
• Market-making incentives are paid in USDC.

It is worth noting that the Polymarket platform does not retain all fee pools, with a fixed percentage of fees (20% for Crypto markets, 25% for sports betting events) directly returned to LP. (Note: Polymarket's US compliant platform uses a simple fixed charge of 0.01%. This analysis only discusses the global CLOB platform that has introduced the new fee structure in 2026.)

Part II. Market Maker Incentive Program (Limit Order Execution Rewards)

This part of the incentive only covers markets that have charged taker fees. This means that only limit orders eaten by traders can receive corresponding rewards; simply placing orders that do not execute does not count.

The calculation of reward amounts is the same as the fees for takers. Each participant's reward is proportional to their trading volume, and the total prize pool is composed of a portion of the collected fees (20% for Crypto markets, 25% for sports betting events).

Competition occurs only in specific betting events, with LP orders competing only with other LPs in the same liquidity pool.

Daily incentives are sent directly to the corresponding wallet address in USDC.

Part III. Liquidity Incentive (Idle Order Incentive)

The second set of incentive systems is provided by the Polymarket platform, applicable to all betting events (including those without charge fees).

The core distinction is that: there is no need for orders to execute, as long as liquidity is provided by placing orders on the order book, users can earn money.

Each betting event defines several parameters that determine eligibility:

• Maximum incentive price difference (e.g., ±4 cents)
• Minimum order quantity
• Daily total reward pool

The platform samples the order book every minute, recording 10,080 snapshots a week.

The rewards calculation formula is super detailed:

1. Distance Score (Quadratic Equation)

Where,

V - Maximum incentive price difference

s - Distance from mid-point

Orders close to the mid-point score exponentially higher.

2. Bilateral Score (YES/NO Complementary Structure)

Buy bids and ask quotes are scored separately, considering the complementary structure of the Yes/No market.

3. Q Value Minimization Adjustment

Betting events providing liquidity at both ends of the order book score higher.

Single-sided quotes will be penalized unless the market probability is close to 0 or 1.

4. Final Score

All LP scores will be normalized and aggregated over time to determine each participant's proportionate share in the market reward pool.

Rewards will be distributed in USDC at midnight UTC time, starting from a minimum of 1 dollar.

Currently, active reward betting events and individual earnings can be viewed live at polymarket.com/rewards. The incentive price differences are highlighted in blue on the order book interface, and users can also check Polymarket's official documentation.

Currently, one-way orders can still earn points (though at a significant discount), while two-way quotes are prioritized for incentive points. Rewards are calculated separately for each individual betting event. There is no cross-event calculation. In practice, this system rewards traders who maintain tight spreads and balanced liquidity near the market mid-point, enhancing the trading experience for all users.

Part IV. Sponsored LP Incentives

The third mechanism allows anyone to directly provide LP incentives for specific markets using USDC, attracting LPs to market-make. Sponsors can input or withdraw funds at any time, and any unspent funds will be automatically returned.

The rules for this mechanism are entirely consistent with the liquidity incentive program——you just need to place orders, not execute them.

A typical case is the betting event "Will Jesus Christ return before 2027?" where a user on a certain platform threw $70,000 as LP incentives in February, now receiving around $57 daily in liquidity incentives, making this event one of the platform's deepest betting events. This mechanism allows the community to actively promote market liquidity for any betting event without waiting for Polymarket to take action.

Part V. The Strongest Anti-Manipulation Indicator for POLY Airdrops

At first glance, it seems that Polymarket just needs more traders.

However, if the majority of users only rely on market orders, the platform will soon face liquidity challenges.

Polymarket does not depend on centralized market makers, so if there are not enough limit orders, the order book will become sparse.

In this scenario, it is challenging to avoid excessive slippage when buying, selling, or executing large orders, and fees will skyrocket.

Polymarket does not need volume bots; it needs real value-providing LPs.

Previously, everyone was solely focused on boosting trading volume, thinking that high trading volume was the key to obtaining airdrops. However, the new fee structure and reward program suggest a different incentive model——what matters is not just trading volume, but participation activity in betting events that generate fees and require liquidity. In other words, the platform rewards targeted LPs, not merely passive limit orders.

The reward distribution formula effectively reveals the type of liquidity that Polymarket values most. The scoring system assesses:

• Proximity of orders to the midpoint
• Order size
• Balance between buy and sell prices

Thus, rewards become a direct measure of how a trader's liquidity contributes to the platform's value. If traders consistently receive rewards, it indicates their orders are actively enhancing market liquidity and execution quality. The following are examples of market participants obtaining potential incentives:

• Will Arctic Sea Ice Extent reach a maximum this winter?——Has existed for 3 months, with a trading volume of less than $20,000, liquidity reward only $9;
• Will Bitcoin reach $75,000 in March?——Has existed for two weeks, with a trading volume of $3 million, liquidity reward $142;
• Bitcoin Up/Down - 15 Minutes——Covering hundreds of betting events, with daily trading of millions of dollars, daily fees of about $10,000, liquidity reward $2,000.

Compared to specific betting events, the truth revealed by the data is more critical——compared to simple trading volume metrics, taker fees and earned liquidity rewards are harder to manipulate artificially. Systematically earning market-making incentives requires capital, risk management, and continuous presence, which significantly diminishes the advantages of the exploiters and favors genuine market participants.

Conclusion: Taker Fees and LP Incentives May Become Key Indicators for POLY Airdrops

The future POLY token distribution will depend not only on trading volume but is more likely to depend on the paid taker fees and earned LP rewards. These indicators are transparent, measurable, and align highly with platform demand. In this model, rewards are not tied to volume manipulation but to contributions that genuinely optimize the trading experience on the platform: liquidity, stability, and efficient price discovery.

In other words, those who are the top-performing LPs are the most valuable users. The hardest-core Polymarket players are never the ones with the highest trading volume, but rather the LPs that deeply cultivate the liquidity of the order book.

Additionally attached is the Polymarket LP market-making guide: 《Now is the Best Time to Interact with Polymarket (with Exclusive Tutorial Guide)》

Of course, there are always different perspectives in the market, and some believe that the LP incentive program launched by Polymarket seems like "spending money for liquidity," but is actually a trap set up for LP users to profit. Let's hear the counterpoint.

Counterpoint: Is the Polymarket LP Incentive a Platform Scam? Is LP Actually a "Pay to Lose" Trap?

In response to the LP incentive program launched by Polymarket, arbitrage traders and Polymarket/Kalshi bot players securezer0 directly labeled much of the current KOL hype as "Polymarket Rewards Farming" as a massive psychological warfare, pointing to it as a collective hype concocted directly by the platform or heavily incentivized KOLs.

The Truth about LP: Another Form of "Paid to Lose"?

Several LPs candidly stated: The current LP mechanism on Polymarket essentially equates to "spending money to incur losses."

What’s the problem? The leaderboard directly counts LP rewards into profit and loss data but fails to mention a key concept——LP wear and tear.

When your position is executed unilaterally, it often cannot be sold at a reasonable price or may not sell at all before the settlement of the betting event, resulting in systemic losses that the platform obscures. The real ROI data is far below the reported numbers, and for most LP participants, profitability is indeed negative. They are just hoping that the POLY airdrop can cover the losses——this is not an arbitrage incentive program, but a faith-based transaction with the platform.

Why Do Professional Market Makers Hesitate to Enter?

Professional market makers generally tend to avoid Polymarket LP market-making for one core reason: the risk of insider trading is real.

Both Polymarket and Kalshi have to exchange equity for liquidity to get professional market makers to join the table——this itself indicates a problem.

Effective LP operations require a highly complex automated risk control system. The myth of "low barriers, high returns" for LP only holds true under the premise that Polymarket continuously pours large sums to subsidize liquidity rewards——and this path, in the long run, is simply unsustainable.

The Platform's True Dilemma: Needing to "Generate" Millions of Dollars from Thin Air Daily

Insufficient liquidity is the primary driving force behind Polymarket gradually flipping the fee switch.

To maintain liquidity rewards for various betting events and retain more USDC liquidity on the platform, Polymarket needs to consume millions of dollars daily to sustain trading depth. If a better solution cannot be found, the platform has no choice but to charge fees on every transaction, using that revenue to support investors and market makers.

And once comprehensive fees are imposed, ordinary users will find themselves in a very awkward position——because in that case, traditional sports betting platforms might actually be more cost-effective, for the reasons:

• Overall rates yield equivalent odds;
• Traditional platforms still offer cashback and cash incentives;
• Rules are clear, and user protections are regulated;
• Insider traders will face account suspension or even imprisonment risks.

Three Truly Feasible Solutions: Fixed Fees, POLY Liquidity Pool, Expanded Product Charges

Rather than drinking poison to quench thirst, it is better to cut to the root: target the vampires, not harvest the users. Charge fees to the arbitrage bots that extract USDC from real users. After all, these bots are the source of liquid contamination. Specifically, there are the following methods:

Just impose a 1% fixed fee on profits, i.e. charge only on the net earnings from the selling price minus the principal, without touching the principal, preserving the user trading experience.

Build a native liquidity pool with POLY tokens. Programmatically provide liquidity for each betting event at the protocol level, deeply binding token economy with liquidity supply.

Charge fees on expanded products, not core products. Parlay, derivatives, leverage——these are natural charging scenarios, and making changes here wouldn’t harm the fundamental user experience.

Currently, it appears that Polymarket's moat needs strengthening. Zero fees and better odds are the most important value anchors differentiating it from traditional betting platforms. To abandon these points for short-term revenue is tantamount to self-destruction.

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