Structural#074

Resolution-Drift Inventory Hedging for MMs

As a market maker's positions approach the oracle (UMA) resolution date, this strategy decides for each leftover position whether it's cheaper to simply hold it to settlement or to pair it with its complement and redeem it for $1 on-chain, based on remaining time value and gas costs. The edge is rescuing spread profits that careless makers lose to last-minute adverse trades and settlement uncertainty near expiry.

What you need to run it

  • Time-to-resolution and oracle-status tracking per market
  • Settlement vs merge/redeem cost-comparison logic
  • Gas-aware on-chain redeem/merge execution
  • End-of-life quote-withdrawal scheduler

Where this applies

Markets on Polymarket where resolution-drift inventory hedging for mms is the natural play:

  • Will Bitcoin close above $120k on Sept 30, 2026?
  • Will the Lakers beat the Suns in their next matchup?
  • Will the September 2026 FOMC meeting result in a rate cut?

Capabilities this demands

On-chain / walletPatienceCustom code / APIRisk management

At a glance

CategoryStructural
Requirements4
CapabilitiesOn-chain / wallet, Patience, Custom code / API, Risk management
VenuePolymarket (CLOB, Polygon)

Build it

Related structural strategies

This is documentation, not advice. Poly Research & Robotics publishes how these strategies work because the method should be checkable — not as a recommendation to trade them. See the full strategy database (147 strategies) or the data resources directory.
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