LZLZL/Prediction markets/Mechanics
FREEJUDGE IT A · MechanicsFees

The taker fee
why 50¢ costs the most

2026-08-21 · the coefficient is measured, not documented

The taker fee is not a flat rate. Per share it is a parabola peaking at 50¢ and falling toward both tails. But expressed as a percentage of your stake it becomes monotonically decreasing — the same fee, two bases, two opposite intuitions. Mixing them up will flip the sign of a strategy's expected value.

1The formula

fee = 0.07 × p × (1 − p) × shares p = your fill price (0–1) · makers pay nothing; the fee is entirely on the taker

p(1−p) maxes at 0.25 when p = 0.5 and falls to zero at both ends. So the per-share fee is a downward parabola with its peak dead centre.

Fill pricePer sharePer 100 shares
0.501.75¢$1.75
0.701.47¢$1.47
0.900.63¢$0.63
0.950.33¢$0.33

2Change the base and the direction reverses

What leaves your account is stake = p × shares, so:

fee ÷ stake = 0.07 × (1 − p) p cancels — this is a straight line, not a parabola
Fill pricePer share% of stake
0.100.63¢6.30%worst as a share of money
0.501.75¢3.50%worst per share
0.900.63¢0.70%
0.950.33¢0.35%cheapest on both bases
⚠ 0.10 and 0.90 cost the identical per-share fee, and differ ninefold as a percentage

Both have p(1−p) = 0.09, so both pay 0.63¢ a share. But one cost you 10¢ of capital and the other 90¢ — the same fee spread over very different bases.

So "50¢ is dearest" is only true per share. If your question is "what fraction of my money was taken", the answer is the cheaper you buy, the harder you are hit, linearly.

3Which base to use

Your questionBase
How much more edge do I need to break even?per share — payout is $1 a share, so edge is per share too
What fraction of this money went in fees?% of stake
Does my gross edge cover costs?per share — both sides must match
⚠ Mixing bases is the most common way to compute a losing strategy as a winner

"My edge is 2%, the fee is only 1.75%, so I profit" is probably wrong: that 2% is very likely percentage points per share, while 1.75% may be a share of stake. They cannot be subtracted.

Everything on this site uses percentage points per share (pp): at p≈0.5 the fee is 1.75pp. Confirm both sides share a base before subtracting — this is not pedantry, it is an error that flips signs.

4Where 0.07 comes from

It is not in the documentation. I recovered it by reconciling real fills: take one market-making wallet's flow for a full day, predict the rebate the formula implies, and compare with what landed the next day.

Amount
Predicted from the formula$45.23
Received next day$46.58
Agreement97% (the gap is 43 minutes at the start I did not capture)

An independent second check: a fill with a notional of $18 cost $18.6552 — a fee of $0.6552, which 0.07 × (1−0.48) × 18 reproduces to the cent.

⚠ The "base fee" fields in the config are not the fee

The CLOB config exposes maker_base_fee / taker_base_fee showing 1000. That is a raw configuration field, not a rate. Do not compute with it.

Same family as the rest of the API traps: a field existing is not the same as it meaning what you assume.

5Why makers pay zero

Makers pay nothing and, when filled, receive about +0.25¢/share (20% of the taker's fee). It looks free. It is the venue buying liquidity — and what the maker pays instead is adverse selection: getting filled is usually the moment you would rather not have been.

How large? On crypto up/down: 47 same-shape wallets, median −0.74¢/share. A 0.25¢ rebate does not cover it. "Zero fees" is the entry ticket, not the profit.

6Practical consequences

ConsequenceNote
Trading the tails costs less per share0.33¢ at 0.95 is a fifth of the cost at 50¢
But tails are usually priced better toocheap to trade is not the same as easy to beat
Buying very cheap is taxed hardest6.3% of stake at 0.10 — casino territory
Post rather than take when you cansaves the entire fee; costs you fill certainty
Compute the cost line before the strategyif gross edge cannot clear 1.75pp + spread + slippage, nothing else matters

I verified the last one with real money: a taker line ran 41 hours against a cost line of about 2.55pp while its observed gross edge was 1.56pp — a certain loss on every window. Full ledger in the autopsy.

7One line to keep

The fee is a parabola peaking at 50¢; as a share of stake it is a straight line that hits cheap buys hardest. Both statements are true, and using the wrong one turns a losing strategy into a winning number — so match the bases before you subtract.

EvidenceCheck it yourself

The 0.07 measured, not documented. A day of flow predicted $45.23 against $46.58 received (97%; the gap is 43 unrecorded minutes). Separately a $18 notional fill cost $18.6552 — fee $0.6552, matching to the cent.
Parabola p(1−p) peaks at 0.25 for p=0.5; pure algebra, check it yourself.
% of stake = 0.07(1−p) from fee ÷ (p × shares); p cancels.
Config fields are not rates maker_base_fee/taker_base_fee show 1000, unrelated to the measured rate.
Maker economics 47 same-shape wallets median −0.74¢/share against a ~+0.25¢/share rebate.
Cost line tested with money see the autopsy: 2.55pp cost vs 1.56pp gross.
Checked 2026-08. The fee structure has been revised before; verify current terms.

NextWhere to go

B · REBATES
Four different things all called "rebate"
G · ENGINEERING
pp vs % — the error that flips signs
A · MECHANICS
How the fee raises your bar
E · UP/DOWN
What a 2.55pp cost line does to a 1.56pp edge
This is an educational and research record. It is not investment advice, promises no returns, and offers no personalised trading recommendations. Rules and API behaviour are per the official documentation; this page states when it was checked and both can change without notice. Prediction markets are restricted or unavailable in some jurisdictions — confirm your own before taking part.