Combating Polymarket Bots: When Order Placement Rewards Become Deadly Bait

On November 22, 2025, a silent battle is unfolding in a prediction market on Polymarket.

One side in the duel is a mysterious trader named @totofdn. The other side is an automated arbitrage bot named sunshines.

It all started with a seemingly insignificant sell order. @totofdn placed a tiny sell order: 5 units of No @ $0.34. This action instantly compressed the bid-ask spread in the market to less than $0.04—the magic number that triggers the platform's "order reward."

Almost simultaneously, Sunshines reacted. A massive sell order was dumped into the order book: 100 units of No @ 0.34. The bot arrived, strictly following its code instructions to earn liquidity rewards from the platform.

But it didn't know that this was exactly the signal @totofdn was waiting for.

@totofdn readily absorbed all of the bot's sell orders, acquiring 100 units of the "No" shares at an average price of 0.34. The bot, meanwhile, was forced to take over 100 units of the "Yes" shares at an average price of 0.66, completely unaware that it had fallen into a trap.

This was just the beginning. For the next four hours, this "fake cheat, real payout" tactic was repeated repeatedly. Sunshines, like a runaway ATM, kept spewing out cash. Four hours, dozens of repetitions, over $1500. The bot's account was precisely emptied, while @totofdn emerged unscathed.

This is a meticulously planned "cognitive crackdown" targeting automated scripts. It reveals a truth about on-chain arbitrage: here, automation is not the same as intelligence; AI can improve efficiency, but it can also make you lose even more.

The "Optimal Solution" and "Fatal Flaw" of Platform Incentives

To understand the intricacies of this battle, we must first return to the rules of Polymarket itself. As a decentralized prediction market, liquidity is its lifeblood. To incentivize users to provide depth to the market, Polymarket has designed a mechanism called the "Order Book Rewards Program."

The core idea of this mechanism is simple: whoever provides liquidity to the market receives rewards. Specifically, as long as users place their limit orders within the designated market and keep them within the blue maximum spread line (the so-called "spread"), and meet certain share requirements, they can share in the platform's reward pool proportionally. Rewards are automatically distributed every day at midnight—simple and direct. This spread is typically ±3ct to 4ct of the current midpoint price, with the specific width set in real-time by Polymarket.

Once any rule is quantified, it inevitably gives rise to "score-farming" strategies specifically designed to exploit that rule. Polymarket's order book rewards quickly attracted a special group of "miners." They didn't care about the outcome of the predicted events themselves, but only about how to maximize their rewards. As a result, automated arbitrage bots like Sunshines emerged.

The code logic for these robots is as follows:

Market Scan: Continuously monitor all markets that meet the reward criteria.

Determine the spread: Check if the current bid-ask spread in the market is less than a certain threshold (e.g., $0.04).

Triggering a pending order: Once a price spread in a market is found to meet the liquidity reward requirements, an order that meets the reward rules is immediately placed within the price spread range.

Claim your reward: Wait for the reward to be distributed at midnight.

From a coding perspective, this logic is flawless; it perfectly leverages the rules. The bots tirelessly "fill the gaps" in various markets, contributing liquidity data to the platform in exchange for rewards. They are the "optimal solution" to the rules, the "model citizens" in Polymarket's eyes.

The problem is that these bots only analyze price spreads, share, and rewards; they don't understand market sentiment, counterparty analysis, or risk control. They can't distinguish whether a sudden, tiny order that compresses the price spread to the trigger condition is a genuine trading demand or an elaborate trap.

When @totofdn posted those 5 sell orders for No @ 0.34, sunshines' code told it, "Opportunity! The price difference has been compressed to 1¢, quickly place an order to claim the reward!" It completely failed to realize that this 0.01¢ price difference was fake, artificially created. It only saw the "optimal solution" of the rule, but failed to see the "fatal flaw" behind this solution.

Ultimately, this robot, created for the sake of rewards, also became prey for a more advanced hunter because of its mindless pursuit of rewards.

From physical warfare to cognitive warfare

From MEV to Jito, and now to Polymarket's "bot hunt," the war without gunpowder, on-chain arbitrage is undergoing a profound evolution.

If the early MEV (Maximum Extractable Value) war was a "physical war" revolving around gas fees and block space, then today's on-chain game is increasingly resembling a "cognitive war" that tests strategy and psychology.

In the early days of MEV, victory belonged to the "scientists" who possessed the fastest networks, the most powerful hardware, and the highest priority in order processing. They were like a horde of trucks rampaging down a highway, using absolute power and speed to preemptively seize opportunities, squeeze orders, and liquidate transactions, extracting value from ordinary users' trades. It was a simple and brutal era where the competition was about who had the most developed "muscles."

Subsequently, MEV solutions, represented by Jito, emerged, attempting to establish a new order in this chaotic physical war. By auctioning block space, Jito redistributed the rewards of MEVs, allowing validators and stakers to also receive a share. This alleviated network congestion to some extent, but also made the acquisition of MEVs more "legitimate" and "industrialized." The war moved from the shadows to the open, from individual heroism to an arms race between professional institutions.

This incident at Polymarket reflects a new phase in on-chain competition. Victory is no longer determined by millisecond-level latency or exorbitant gas fees, but rather by understanding the rules, insight into market players, and the application of strategies.

@totofdn didn't use any sophisticated hacking techniques, nor did he mobilize massive computing resources. His only weapon was a deep understanding of the Polymarket reward mechanism and accurate prediction of the behavior patterns of automated scripts like Sunshines. He won a war of information asymmetry, and even more importantly, a war of cognition.

The laws of the on-chain dark forest are changing. Simple automated scripts, lacking the ability to dynamically adapt to the environment and the awareness of playing against opponents, will find it increasingly difficult to survive. They are like species that have not evolved completely; although they are highly efficient in specific ecological niches (such as farming rewards), they are powerless to fight back once the environment changes or they encounter more advanced predators.

From the physical warfare of MEV to the order warfare of Jito, and then to the cognitive warfare of Polymarket, on-chain arbitrage is evolving from a game for "engineers" into a game for "strategists" and "psychologists." In this increasingly complex dark forest, only those participants who can continuously evolve and improve their cognitive dimensions will ultimately survive.