You open a prediction market and see YES priced at $0.7 and NO priced at $0.6, adding up to $1.3. Many people wonder: this looks like a guaranteed loss, so what exactly is the extra $0.3?
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Core conclusion: the extra part is "mirror orders in the order book"
Polymarket does not work like a normal stock exchange where buyers and sellers freely post prices. It has a mandatory rule: YES and NO in the same market share one order book, and their prices are mirror images of each other.
What does this mean? When you place a buy order at $0.18 in the YES market, the system automatically creates a sell order at $0.82 in the NO market. These two prices always add up to exactly 1.
So when you see YES and NO quotes adding up to 1.3, what you are actually seeing are separate sell orders in two markets: someone is selling YES at 0.7, and someone is selling NO at 0.6. But these two orders do not necessarily fill at the same time. The system only guarantees that "each matched pair of buy and sell orders adds up to 1." It does not guarantee that any two orders you happen to see will add up to 1.
"YES + NO = 1" is a mathematical constraint, not a market consensus
Polymarket's underlying mechanism is this: spend 1 USDC to mint one YES share plus one NO share as a "complete set." When the market settles, the winning share is worth $1 and the losing share is worth $0. No matter the outcome, the total value of YES + NO always equals $1.
This formula is locked in by math, not negotiated by market participants. It is like cutting an apple in half: the two halves still add up to one apple. If one half were selling for 0.7 yuan and the other half for 0.6 yuan, arbitrageurs would immediately buy both halves and lock in a profit. That is why such unreasonable orders do not last long.
Then what is the "pricing deviation" mentioned in academic papers?
Some research does point out that Polymarket has systematic pricing deviations, and arbitrageurs have made more than $40 million from them in one year. But that does not mean "YES + NO > 1" itself persists over time.
The deviation mainly appears in two situations:
The combined price of YES and NO in the same market deviates from the theoretical value of $1. However, this deviation does not last long because arbitrageurs quickly pull prices back into balance.
Logically connected markets show probability inconsistencies, such as inconsistent pricing between "Trump wins" and "Republican wins."
The key point is that deviations are short-lived, not the norm. If the "YES 0.7 + NO 0.6 = 1.3" you see actually persisted, it would mean that market has extremely poor liquidity, or you are not looking at real-time quotes from the same moment at all.
Risk warning: If you see YES and NO prices in the same market clearly adding up to more than 1, do not think you have found a risk-free arbitrage opportunity. The most likely result of trying to execute such an arbitrage is that your orders get matched by the system, and at the actual fill price there is no profit margin at all. This is also why the "YES + NO < 1 arbitrage strategy" recommended by many KOLs simply does not work in practice.
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FAQ
Q: Is the "YES 0.7 + NO 0.6 = 1.3" I see fake? Answer: It is not necessarily fake. It may be a snapshot from different moments, or from different orders in two markets. But if you try to buy YES and NO at those prices at the same time, the system will match you at an actual fill price, which will most likely add up to less than or equal to 1.
Q: When does a real "YES + NO > 1" appear? Answer: In markets with extremely poor liquidity and sparse quotes, a brief quote inconsistency may appear. But this is usually flattened by arbitrageurs within seconds. If it persists, it means the market has no actual trading at all, and the quotes are meaningless.
