NegRisk Multi-Outcome Arbitrage

How It Works Polymarket's NegRisk mechanism allows multi-outcome markets where shares across all outcomes must theoretically sum to $1. When market makers or uninformed traders push individual outcome prices such that their aggregate exceeds or falls below $1 by more than the fee load, a riskless arbitrage position can be constructed by buying the underpriced complement set or selling the overpriced set.

Entry / Exit Conditions The scanner continuously monitors order books for all outcomes in a NegRisk group. An entry is triggered when the sum of best-ask prices across all outcomes falls below `1 - fee_threshold` (long all outcomes) or the sum of best-bid prices exceeds `1 + fee_threshold` (short all outcomes). Positions are closed when the market resolves or when prices revert to within the no-arbitrage band.

Verified Results The repository explicitly states 60 passing tests and a paper-trading mode, suggesting the logic has been validated in simulation. No live PnL figures are disclosed.

Implementation Notes Built in Python using asyncio for concurrent order-book polling. Paper-trading mode and a live browser demo are included, lowering the barrier to validation before live deployment.

Risks Execution risk is significant: prices can move between detection and fill, converting a theoretical profit into a loss. Smart-contract resolution risk and potential Polymarket fee changes also threaten the edge. Liquidity in individual legs may be insufficient to fill the full arbitrage quantity.