Methodology
Polymarket liquidity providers will be rewarded based on a formula that rewards participation in markets (complementary consideration!), boosts two-sided depth (single-sided orders still score), and spread (vs. mid-market, adjusted for the size cutoff!). Each market still configure a max spread and min size cutoff within which orders are considered the average of rewards earned is determined by the relative share of each participant's Q<sub>n</sub> in market m.
| Variable | Description |
|---|---|
| $ | order position scoring function |
| v | max spread from midpoint (in cents) |
| s | spread from size-cutoff-adjusted midpoint |
| b | in-game multiplier |
| m | market |
| m' | market complement (i.e NO if m = YES) |
| n | trader index |
| u | sample index |
| c | scaling factor (currently 3.0 on all markets) |
| Q<sub>ne</sub> | point total for book one for a sample |
| Q<sub>no</sub> | point total for book two for a sample |
| Spread% | distance from midpoint (bps or relative) for order n in market m |
| BidSize | share-denominated quantity of bid |
| AskSize | share-denominated quantity of ask |