How to Build a Polymarket Passive Income Bot from Scratch

Source:Archive

Compiled by｜Odaily（@OdailyChina）；Translated by｜Azuma（@azuma_eth）

Polymarket is the hottest prediction market platform today, where people use real money to bet on real-world event outcomes, such as US elections, sports matches, asset prices, policy changes, and more.

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

There are also bots on Polymarket that profit massively by detecting traders' mistakes faster than others and repeatedly exploiting these errors across thousands of executions.

The reasons why bots thrive on Polymarket are:

• Open API, transparent order book — bots can see everything;
• Extremely low fees, instant settlement — allows micro-spread arbitrage to work effectively;
• Millions of human users trading manually, many of whom frequently make mistakes.

This is not an advertisement for bots. This is a breakdown, from the dumbest bots to the truly profitable AI monsters.

1. Beginner-Level Bots

Airdrop Farming Bots: Volume Spammers

The market anticipates that interacting with Polymarket will yield generous airdrop rewards. These bots continuously buy and immediately sell the same position in a loop, solely to inflate trading volume — no real intent, purely chasing volume.

The operation is simple — pick a market with good liquidity, for example, buy a "YES" position for $10, then instantly sell it for $10, and the volume is inflated.

Advantages:

• None.

Disadvantages:

• No one knows the specific criteria for the airdrop;
• The platform might exclude such transactions;
• The airdrop might not even exist, you could be wasting your effort.

Volatility Capture Bots: Specializing in Panic Moments

These bots look for sharp price swings and bet against the market, expecting mean reversion — prices will eventually return to normal.

The bot continuously monitors price history, calculating the deviation of the current price from the recent average. Once prices spike or crash dramatically, the bot quickly opens a counter-position, betting the market overreacted.

Advantages:

• Operable with small capital;
• Simple, easy-to-understand logic;
• Profits from human emotions and mistakes.

Disadvantages:

• Not all volatility is false; sometimes real major news moves the market;
• Setting stop-loss or take-profit levels incorrectly can lead to losses just from fees;
• Risk management must be strict, otherwise, it's a slow bleed.

2. Intermediate-Level Bots

Market-Making Bots: Spread Harvesters

These bots profit by continuously placing limit orders on both the buy and sell sides.

The bot places buy orders slightly below the current price and sell orders slightly above. When both are filled, the spread is captured as profit. Additionally, Polymarket rewards liquidity provision, meaning dual income.

Advantages:

• Dual income sources: spread + platform rewards;
• In calm, low-volatility markets, returns can be surprisingly stable;
• Effective if you choose the right markets.

Disadvantages:

• Requires at least $10,000+ in capital for the spread to be meaningful;
• Very vulnerable to sudden market moves: if your buy order fills just before a crash, you're stuck at a high price;
• One bad market can wipe out a week's profits.

3. Advanced-Level Bots

Arbitrage Bots

An arbitrage opportunity exists when the sum of the prices of correlated outcomes (e.g., the basic "YES" and "NO") is less than 100%.

A more complex test involves arbitraging between different correlated markets (different phrasings of the same event, time windows, compound conditions, etc.). As long as the position is constructed correctly, you can lock in a profit regardless of the outcome.

Advantages:

• A correctly constructed arbitrage strategy does not depend on the event outcome;
• Profits from market inefficiencies that humans cannot process quickly.

Disadvantages:

• The more arbitrage bots, the faster the opportunity window closes — profits get thinner;
• A theoretically perfect arbitrage strategy can fail in execution due to insufficient liquidity.

AI Bots

These bots don't just look at prices; they can estimate the true probability more accurately than the market. They integrate and analyze clues from historical prices, trading volume, news, on-chain data, whale behavior, and sometimes even analyze collective sentiment on social media.

If the model determines the market is pricing a 40% probability while the true probability is 60%, the bot will buy low and sell high, operating 24/7.

Advantages:

• A successful AI bot can operate across politics, sports, macro, etc., running one model across hundreds of markets;
• Can incorporate multiple signal sources: statistical, on-chain, news, behavioral indicators.

Disadvantages:

• High barrier to entry.

You 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 bulletproof risk management system. This isn't a side hustle; it's equivalent to starting a startup.

Tech Stack (Required for All Bots)

Polymarket API Access: Official documentation includes all real-time data and order placement interfaces. Nothing works without this.

Polygon Wallet: Trading happens on Polygon using USDC. You need a wallet private key capable of signing transactions and managing balances.

Historical Data Storage:

• Bots need: prices, volume, spreads, market metadata.
• Recommended PostgreSQL or SQL + columnar storage hybrid for fast data aggregation.

Python + Common Toolchain: For API requests, asynchronous processing, data analysis, machine learning libraries.

Why Do Bots Always Win?

• Speed: No emotions, no hesitation;
• Discipline: Strictly follows system rules;
• Scale: One bot can monitor thousands of markets while you sleep;
• Data Depth: Combines price, order book, news, behavioral patterns into signals you can't calculate manually;

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