Edge

Edge is the mathematical profit baked into a trade before fees and slippage. In the context of intra-market arbitrage on Polymarket, edge is the difference between the guaranteed $1.00 payout of a complete set and the cost to buy the necessary outcome shares at their best-ask prices.

How it's used

For a binary market, edge = 1.00 − (bestAsk(YES) + bestAsk(NO)). For a multi-outcome market with N mutually exclusive outcomes, edge = 1.00 − Σ bestAsk(outcome_i). When the sum of best-ask prices is below $1.00, the numeric gap is the raw edge available to an arbitrageur.

Why edge matters

Edge is the first-pass signal traders use to identify potential intra-market arbitrage opportunities. It represents the maximum theoretical profit before real-world frictions are applied. A positive edge means the market prices, at the best asks, allow a complete-set purchase that costs less than the $1.00 payout the set will be worth if held to resolution.

Practical caveats

Never treat the raw edge as a guaranteed return. The actual profit you can realise is reduced by:

• fees (variable taker fees on Polymarket, currently in the range 0%–1.8% depending on category);
• slippage and partial fills when executing against the CLOB order book;
• tick-size rounding (tick size can be $0.01 or tighten to $0.001 near price extremes);
• settlement and resolution risks (outcomes resolve via the UMA optimistic oracle; disputes can pause settlement);
• smart-contract and operational risk.

Because of these frictions, small positive edges can be uneconomic once fees and slippage are applied. Historically, arbitrageurs have extracted significant value from Polymarket markets, but edge must be assessed alongside execution costs and risk.

In context on Polymarket

On Polymarket you read edge when scanning best-ask prices in the CLOB. The platform's market data surfaces best bids and asks (and the midpoint) via the CLOB API and Market WebSocket. For intra-market binary arbitrage the formula above is a direct, on-chain-aware calculation: buying both legs in a binary or a complete set in a multi-outcome market is implemented by standard CTF split/merge workflows and executed through the Exchange CLOB.

See also

• /glossary/spread