Polymarket quietly introduces taker fees on 15-minute crypto markets

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Prediction market Polymarket quietly added taker fees on 15-minute crypto markets. Polymarket stated that the introduced fees aim to support a new Maker Rebates Program. The introduction of fees marks the end of the prediction market platform’s zero-fee trading model.

Polymarket said that fees influence short-term cryptocurrency trades.

According to Polymarket, the collected fees will be distributed to market makers daily in USDC stablecoins. The redistribution will result in increased liquidity, less spread, and a more straightforward deal in volatile markets.

Polymarket explains the fee curve used in 15-minute markets

Polymarket noted that the change supports regular, competitive quotations, which help agreements execute more reliably and make markets more resilient during instability.

The fees are computed using the fee curve with up to six decimal places and rounded to four decimal places, according to the prediction market platform. Tiny trades at probability extremes may not incur a fee because the minimum non-zero cost is 0.0001 USDC.

Polymarket noted fees change based on market odds, with the highest costs happening when prices are close to 50%. However, as the chance approaches 0% or 100%, it decreases toward zero. 

Source: Polymarket; Taker fees peak at 50% probability, drop near extremes.

It presented different examples of how the fees will be calculated. A taker deal of 100 shares priced at $0.50 would incur a cost of around $1.56, which is slightly over 3% of the trade’s value at the curve’s apex.

Polymarket adding fees sparks discussion across social media

The introduction of fees in the 15-minute crypto markets sparked discussions across social media.

On January 6, Tawer95.eth, the CEO of the PolyScanner3000 bot and Polymarket user, provided a detailed breakdown on X regarding the introduction of the fees. Tawer95.eth named the headline “scary, but not as bad as it sounds.” In his commentary, he asserted that the plan creates a sustainable flow of income to market makers and, in addition, minimizes the incentives of bots that previously took advantage of free liquidity.

On Tuesday, a trader referred to the introduction of fees as directed against high-frequency bots. In his view, fee rebates would help to tighten the spreads and have more stable liquidity. 

On the same day, a different trader argued that the addition of fees would give more protection against wash trading. The trader stated that Polymarket did not commence charging users in the traditional sense, as the expenses were channeled to market makers.

The introduction of fees on Polymarket follows the recent initiation of a real estate prediction market by Polymarket and Parcl, a housing data platform.

On January 5, Cryptopolitan covered a story of Polymarket and Parcl collaborating to establish real estate prediction markets that utilize daily housing price indexes. The report revealed that the collaboration expands the capacity of prediction markets to include residential property data, with an initial focus on US housing markets.

Parcl stated that the partnership will focus on the U.S. housing market by utilizing templates that include questions about index fluctuations over specific time periods. “Whether a city’s home price index finishes up or down over a year, quarter, or month” is one of these questions. 

The firm also pointed out that to ensure participant openness, the markets will monitor Parcl’s resolution page to ascertain the ultimate settlement.

In a separate report dated January 4, Cryptopolitan reported growing concerns over insider trading on the prediction market. The report covered a story about a trader who profited $80,000 overnight after predicting a U.S. military intervention in Venezuela. The trader explained that he believed a strike on Venezuela was imminent, as the U.S. had deployed its largest aircraft carrier.

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