Polymarket’s sharp traders are locking in risk-free profits by missetting the odds and taking advantage of lightning-fast trading while most users struggle to keep up. Arbitrage strategies are quietly making millions of dollars behind the scenes, from wiping out near-certain outcomes to capturing market imbalances.
Decentralized prediction markets are currently attracting capital from retailers and experts, increasing competition for hidden profits. Automated bots, well-funded traders, and new yield incentives are creating a playing field where speed and insight are critical to success.
sponsored
Polymarket Arbitrage: How Risk-Free Profits are Generated
When it comes to decentralized prediction markets, few platforms attract as much intrigue and potential for profit as Polymarket.
Polymarkets have become a battleground for a new breed of crypto-native arbitrage players who exploit micro-inefficiencies in human emotion and market timing.
A recent study from Cornell University describes it as an arbitrage engine rather than a casino. The total price depending on the results at Polymarket can be less than $1, creating a solid profit opportunity.
If an event offers four possible outcomes: “rate cut”, “no change”, “rate increase”, and “other”, and their total price is $0.995, a trader can buy 1 share each and earn $0.005 when any of them is resolved. This is a risk-free return of 0.5%. It’s small, but it becomes meaningful on a large scale.
“Don’t underestimate that 0.5%,” the veteran Polymarket player known as Fish said in an interview with BlockBeats. “If you invest $10,000 and make dozens of these trades every day, the annual returns can be amazing.”
However, these temporary inefficiencies (often lasting several seconds) are now primarily dominated by bots running on Polygon nodes.
sponsored
These automated systems monitor thousands of markets and instantly execute trades the moment a price imbalance occurs. What looked like a clean arbitrage loop has evolved into a high-frequency arms race between latency, coding skills, and on-chain execution speed.
Endgame Sweep: Time of Certainty
Another popular strategy among experienced players is the “endgame sweep” strategy. This requires buying a near-certain upside outcome, typically at a price between $0.95 and $0.99, and waiting for an eventual market resolution.
“The logic is simple: You trade time for certainty,” Fish says. “If retail investors rush to cash out at $0.997, they’re leaving a few basis points for the whales to scoop up.”
sponsored
However, even this seemingly safe play carries the risk of a “black swan.” Events that seem settled can suddenly turn around, like a miscarriage of justice in a sports match, a last-minute legal challenge, or a scandal that upends political expectations.
Whales can also manipulate sentiment by dumping bulk orders and sowing misinformation in Polymarket’s own comments sections, where traders often post lengthy emotional analyses.
Arbitrage as market making
As it turns out, these profit loops aren’t just parasitic. Rather, they serve a function similar to market formation. Arbitrators readjust odds, reduce spreads and improve liquidity.
“If you look at it from this perspective, polymarkets actually appear to be very friendly to market makers,” Fish noted, estimating that liquidity providers may have made more than $20 million in the past year alone.
sponsored
The game is getting bigger as Polymarket continues to expand, including a 4% yield program for the 2028 US election market and speculation of a future IPO and token airdrop. Each new market brings liquidity, inefficiency, and arbitrage space.
Still, the playing field is steeply sloped. According to BlockBeats data, only 0.51% of users make more than $1,000 in profit, and only 1.74% trade with more than $50,000 in volume.
While most traders lose money, a silent minority quietly plans, monitors, and thoroughly executes ways to make steady profits.
“Polymarket arbitrage is engineering, not gambling. You’re not betting on the outcome; you’re betting on inefficiency itself,” Jeremy Whittaker wrote on Medium.
