How to farm LP rewards on @Polymarket?

In this thread I’ll break down how the reward formulas actually work, how to farm more efficiently and how i personally do it

I won’t go over the basic stuff like what LP farming even is, that’s been covered a hundred times already, no point repeating it

Let’s get into it 🧵

When i first started deep diving into the Polymarket ecosystem, I came across an interview by @polymarketinfo

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In that one, @defiance_cr talked about building an auto market-making bot and making good money during the 2024 elections

I legit consider him the godfather of LP farming. Definitely read that interview, you’ll 100% find some gold in there

Let’s talk theory

I’d split all reward markets into two categories:

1. Mid competition, big reward (like the New York City Mayoral Election). Good for bigger capital and solid %APY

2. Zero competition markets with small 5–50 USDC rewards. Here you can meet the requirements and grab the entire pool (or big part) with just a small amount of money

How to farm?

Every market with rewards has a “requirements” panel

I’m sure you’ve had that moment when you placed a limit order and didn’t earn any rewards

That’s because when the price moves outside the 0.1–0.9 range, you gotta place orders on both sides to earn rewards

If you’re inside that range, then you can farm with just one order and still get rewards

Equations from docs

If you’ve checked Polymarket’s docs about LP rewards, you probably saw the equations, got scared and closed the tab. Let’s simplify:

Equation 1: the closer your limit order is to the midpoint, the higher the reward

Equation 2: calculates the contribution of each user (based on distance from midpoint + liquidity size)

Equation 3: same as 2, but for the opposite side

Equation 4a: within [0.10, 0.90] range, one-sided orders still earn, but less. Seems like around 3x less (since c = 3 in docs)

Equation 4b: outside that range, only two-sided orders earn rewards

Equation 5: calculates each trader’s share relative to everyone else

Equation 6: your total score accumulates over time based on how long you’ve been providing liquidity

Equation 7: your reward = your score from eq6 / total score * reward pool

How to earn more

I use the “competition” filter and target low/zero competition markets

If the spread’s too big, I’ll leave a limit order there. If it gets filled, I can farm from both sides more efficiently later

Sometimes this also gives an extra profit boost, like I showed in my previous post:

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Links:

Reward tab on Polymarket: polymarket.com/rewards?via=d1…

Docs with equations: docs.polymarket.com/developers/rew…

If you wanna support me, sign up with my link: polymarket.com/?via=d1namit