How to build a Polymarket passive income robot from scratch

This article is from: Archive

Compiled by Odaily Planet Daily ( @OdailyChina ); Translated by Azuma ( @azuma_eth )

Polymarket is currently the hottest prediction market platform, where people wager real money on the outcomes of real-world events, such as the US election, sports events, asset prices, policy changes, and so on.

Polymarket operates on the Polygon network, uses USDC for settlement, and offers transparent, fast transactions with virtually no fees.

There are also bots on Polymarket that make huge profits through thousands of executions by finding traders' mistakes faster than others and reusing those mistakes.

The reason why robots are so successful on Polymarket is as follows:

• Open API, transparent order book—the robot can see everything;
• Extremely low transaction fees and instant settlement—small price spread arbitrage can operate effectively.
• Millions of human users are trading manually, and many of them are making frequent mistakes.

This is not an advertisement for robots. This is a breakdown of everything from the dumbest robots to AI monsters that can actually make money.

I. Entry-level Robots

Airdrop Mining Robots: Data Boosting Machines

The market anticipates receiving generous airdrop rewards for interacting with Polymarket. These bots repeatedly buy and immediately sell the same position, in a cycle designed solely to inflate trading volume—without any genuine intent, purely for boosting volume.

The operation is also very simple - choose a market with good liquidity, for example, buy a "YES" position for $10, and then sell it for $10 immediately. That's how you boost the trading volume.

advantage:

• none.

shortcoming:

• No one knows the specific criteria for airdrops;
• The platform may not count such transactions;
• The airdrop may not exist, and you may have been working for nothing.

Wave Capture Robot: Specializing in capturing moments of panic

These robots look for sharp price fluctuations and bet against the market, predicting that prices will eventually return to normal.

The robot continuously monitors historical prices and calculates the deviation of the current price from the recent average. If prices surge or plummet, the robot quickly opens a position in the opposite direction, betting on an overreaction by the market.

advantage:

• It can be operated with a small amount of capital;
• The logic is simple and easy to understand;
• Profiting from the emotions and mistakes of human users.

shortcoming:

• Not all fluctuations are false; sometimes big news can trigger market changes.
• If you set the wrong stop-loss or target price, the transaction fees alone can make you lose money.
• Risk management must be rigorous, otherwise it will result in slow, chronic bleeding.

II. Advanced Robots

Market-making robots: price spread harvesters

These types of robots profit by continuously placing buy and sell limit orders.

The bot will place buy orders slightly below the current price and sell orders slightly above it. The difference is profited when both are filled. Furthermore, Polymarket rewards liquidity provision, meaning double the benefit.

advantage:

• Dual revenue streams: price difference + platform rewards;
• In calm, low-volatility markets, returns can be surprisingly stable;
• Choosing the right market is key to success.

shortcoming:

• At least $10,000 is required for the price difference to be meaningful;
• I'm terrified of sudden market fluctuations: if your buy order was just executed before a crash, you'll end up trapped at a high price.
• A bad market can wipe out a week's worth of earnings.

III. Advanced Robots

Arbitrage Robot

Arbitrage opportunities exist when the sum of the prices of related results (such as the most basic "YES" and "NO") is less than 100%.

More complex tests involve arbitrage between different related markets (different descriptions of the same event, time windows, combined conditions, etc.). As long as the position is constructed correctly, you can make a profit regardless of the outcome.

advantage:

• A properly constructed arbitrage strategy does not depend on the outcome of events;
• Profit from market inefficiencies that humans cannot process quickly.

shortcoming:

• The more arbitrage robots there are, the faster the window of opportunity closes—profits become increasingly thin.
• A perfect arbitrage strategy on paper may fail in practice due to insufficient liquidity.

AI robots

These bots do more than just look at prices; they can estimate true probabilities more accurately than the market. They integrate and analyze clues such as historical prices, trading volumes, news, on-chain data, and whale behavior, and sometimes even analyze collective sentiment on social media.

If the model determines that the market price has a 40% probability, while the actual probability is 60%, the robot will buy low and sell high, operating around the clock.

advantage:

• Successful AI robots can span fields such as politics, sports, and macroeconomics, with one model working across hundreds of markets;
• It can cover multiple signal sources: statistics, on-chain, news, and behavioral indicators.

shortcoming:

• The entry barrier is relatively high.

You'll need data pipelines, infrastructure, machine learning skills, financial intuition, a risk framework, and resources for data storage, processing, continuous model retraining, monitoring, and building a robust risk management system. This isn't a side hustle; it's equivalent to starting a startup.

Technology stack (required for all robots)

Polymarket API Access: The official documentation contains all real-time data and order placement interfaces. Without this, you can't do anything.

Polygon Wallet: Transactions are conducted on Polygon using USDC. You will need a wallet private key that can sign transactions and manage your balance.

Historical data storage:

• The robot needs: price, trading volume, price spread, and market metadata.
• A hybrid approach using PostgreSQL or SQL with columnar storage is recommended for fast data aggregation.

Python + common toolchains: for API requests, asynchronous processing, data analysis, and machine learning libraries.

Why do robots always win?

• Speed: emotionless, decisive;
• Discipline: Strictly adhere to system rules;
• Scale: One robot can monitor thousands of markets while you sleep;
• Data Depth: Combining prices, order books, news, and behavioral patterns into signals you can't calculate manually;

In summary, using trading bots on Polymarket is a powerful tool for automating income generation—but only if you manage your risks effectively.