Welcome to the Polkamarkets V2 Documentation!
Liquidity Providers are essential to well-functioning prediction markets. Given that there are risks involved, Liquidity Providers are rewarded for adding liquidity:
  • They can earn a fee up to 5% of every trade.
For example, Alice has provided 60% of the liquidity to a given market, and therefore holds 60% of the market's liquidity pool shares. When Bob buys $100 USDC worth of shares in outcome A in that market, he pays a $2 USDC fee (2% of the trade value) to the Liquidity Providers. Alice will earn 60% of the $2 USDC fee paid by Bob, ie. $1.2 USDC.
The higher the number of trades in a market, the more fees will be earned by Liquidity Providers.
It is important to note that adding liquidity is not without risk. Make sure you understand the Strategies and Risks for Liquidity Providers before providing liquidity to a market.