LP Rewards

How LP works

Each incentivized market has a daily reward pool. Liquidity providers compete for a share of that pool by keeping useful limit orders resting on the book. It is not a fixed payment for placing an order.

At unpredictable checks throughout the reward day, Agara:

1. finds the current market midpoint;
2. considers only the first 50 resting quotes in queue order at each price level, separately for each outcome and side;
3. ignores selected orders that are too small or too far from that midpoint;
4. gives more points to larger orders and much more weight to closer orders;
5. rewards balanced liquidity on both economic sides; and
6. turns each trader's points into a share of that check.

Those check shares accumulate across the day. Your final percentage of the daily pool depends on your liquidity and every competing trader's liquidity.

One scoring check

Tighter, balanced orders earn a larger share

Example market

Midpoint: 40¢

Daily pool

$100

Max spread

±3¢

Min order

20 shares

✓

40-share bid at 39¢

Qualifies: large enough and 1¢ from midpoint.

✓

40-share ask at 41¢

Qualifies on the other side at the same distance.

×

10-share ask at 42¢

No score: below the 20-share minimum.

×

100-share bid at 36¢

No score: outside the 37–43¢ band.

1

Order quality

Size × closeness to midpoint

2

Your share

Your score ÷ everyone’s score

3

Daily reward

Your share × the $100 pool

Read the price ladder as an order book: prices increase upward, asks move down toward the market, and bids move up toward it. The nearest usable ask at 41¢ and bid at 39¢ place the midpoint halfway between them at 40¢.

The quote rectangles use one color scale. Darker quotes contribute points; faded quotes score zero because they fail an eligibility gate. Color does not represent the number of shares—the quote label states the size directly.

In this example, the market midpoint is 40¢. The eligible band runs from 37¢ to 43¢, though the edges carry zero weight. Each quote must still have at least 20 shares. The 39¢ bid and 41¢ ask are both close, large enough, and balanced. The other two quotes fail one of the gates. All quotes shown are within the first 50 at their respective price levels.

Queue position: the first 50 quotes

At each reward check, only the first 50 resting quotes at each price level are considered for rewards, in the order they joined the queue. This limit is shared across all traders and applies separately to bids and asks for each outcome token: YES bids, YES asks, NO bids, and NO asks each have their own queues.

A quote in position 51 or later earns no points at that check. The first 50 must still meet the minimum-size and spread requirements below. An earlier quote that fails those requirements does not make room for a later quote at the same check.

Fully filled and cancelled orders no longer occupy a queue position, so a later quote can move into the first 50 and be considered at a future check.

Distance from the midpoint

Distance is the absolute gap between a quote's effective price and the midpoint. It is not the full gap between the best bid and ask.

For a 40¢ midpoint:

YES and NO prices are complements. A 40¢ YES price and a 60¢ NO price represent the same probability. Agara converts both books into one effective price scale before finding the midpoint and measuring distance.

The midpoint moves with the book, so every quote's distance can change without the quote itself moving. Recheck your quotes after a price move.

The formulas

The symbols below are used throughout the examples:

1. Eligibility

For a YES quote, $p$ is its displayed price. For a NO quote, write its effective price as $p_{\text{eff}}$. It is the complement:

$$p_{\text{eff}} = 1 - p_{\text{NO}}$$

Distance is:

$$d = \left|p - m\right|$$

Among the first 50 quotes at its price level, a quote passes the size and spread gates when:

$$q \ge q_{\text{min}} \qquad \text{and} \qquad d \le v$$

Each quote is tested independently. Several smaller quotes do not combine to meet $q_{\text{min}}$.

2. Points for one quote

The points for one quote are:

$$S(p,q) = \begin{cases} q\left(\dfrac{v-d}{v}\right)^2, & \text{eligible} \\[6pt] 0, & \text{otherwise} \end{cases}$$

This formula makes size linear and distance quadratic:

• doubling the remaining shares doubles the points at the same price;
• moving closer increases points much faster than a linear rule would; and
• a quote at exactly $d=v$ receives zero points.

A partial fill reduces $q$. If the remaining quoted size falls below $q_{\text{min}}$, the quote stops scoring at later checks.

3. Balance both economic sides

Let $S(x)$ be the point score $S(p,q)$ for an individual quote $x$. Quote scores are then added into two economic sides:

$$Q_1 = \sum_{x \in \mathrm{buy\ yes}} S(x) + \sum_{x \in \mathrm{sell\ no}} S(x)$$ $$Q_2 = \sum_{x \in \mathrm{sell\ yes}} S(x) + \sum_{x \in \mathrm{buy\ no}} S(x)$$

For a midpoint from 10¢ through 90¢, inclusive, the trader's score for one check is:

$$C = \max\left( \min(Q_1,Q_2), \frac{\max(Q_1,Q_2)}{3} \right)$$

Balanced liquidity usually scores through the weaker side. One-sided liquidity can still score, but only at one third of its stronger side.

Below 10¢ or above 90¢, both sides are required:

$$C = \min(Q_1,Q_2)$$

4. Convert check scores into the daily reward

At check $t$, trader $i$ receives a share of all positive scores in that market:

$$r_{i,t} = \frac{C_{i,t}} {\displaystyle\sum_j C_{j,t}}$$

If $T$ checks contain at least one positive score, the daily reward is the trader's average check share multiplied by the pool:

$$R_i = P\left( \frac{1}{T} \sum_{t=1}^{T} r_{i,t} \right)$$

Every scored check has equal weight. A brief burst of very large liquidity cannot outweigh competitive quotes that remain available consistently.

Rewards are calculated separately for each market, then added across all markets for the same reward day (epoch). If your total is at least $1, you receive the full amount, including rewards below $1 from individual markets. A total below $1 is not credited and does not carry into another day.

For example, rewards of $0.60 and $0.40 in two markets on the same day are paid together as $1.

Worked examples

All three examples use a 40¢ midpoint, a 3¢ maximum spread, and a 20-share minimum. Every quote in these examples is within the first 50 at its price level on its outcome and side.

Example 1: tighter quotes beat larger quotes

Trader A rests 40 shares on each side at 39¢ and 41¢. Trader B rests 100 shares on each side at 38¢ and 42¢.

Example 1

40 tight shares beat 100 wide shares

Midpoint 40¢ · max spread ±3¢ · min 20 shares

Trader A · tighter

40 shares on each side

17.78

Trader B · wider

100 shares on each side

11.11

Trader A · 61.54% · $61.54Trader B · 38.46% · $38.46

Trader A's distance is 1¢:

$$S_A = 40\left(\frac{3-1}{3}\right)^2 = 17.78$$

Trader B's distance is 2¢:

$$S_B = 100\left(\frac{3-2}{3}\right)^2 = 11.11$$

Both traders quote equal points on both sides, so their check scores are 17.78 and 11.11. If they are the only participants and every check looks the same:

$$r_A = \frac{17.78}{17.78+11.11} \approx 61.54\%$$ $$R_A \approx \$100 \times 61.54\% = \$61.54$$

Trader B receives the remaining 38.46%, or about $38.46. Trader A still earns more despite using fewer shares because closeness is squared.

Example 2: one-sided liquidity receives reduced credit

A trader rests a 60-share YES bid at 39¢ but no quote on the other economic side.

Example 2

One side receives one-third credit

Midpoint 40¢ · max spread ±3¢ · min 20 shares

Q₁

26.67 points

60-share YES bid at 39¢

Q₂

0 points

No order on the other side

Check score

8.89 points

26.67 ÷ 3

Reduced, not zero

The bid is 1¢ from the midpoint:

$$Q_1 = 60\left(\frac{3-1}{3}\right)^2 = 26.67, \qquad Q_2 = 0$$

Because the 40¢ midpoint is inside the 10–90¢ range:

$$C = \max\left(0,\frac{26.67}{3}\right) = 8.89$$

Adding a similarly competitive ask can raise the score toward the weaker of the two sides. If the midpoint moves below 10¢ or above 90¢, this lone bid scores zero until the other economic side is quoted.

Example 3: consistency across the day

Suppose a market has a $60 pool and three scored checks. Your shares are 50%, 25%, and 0% because your quotes are absent at the third check.

Example 3

Every scored check gets equal weight

Midpoint 40¢ · max spread ±3¢ · min 20 shares

Check 1

50%

Check 2

25%

Check 3

0%

Add your check shares

0.50 + 0.25 + 0 = 0.75

Divide by 3 checks

0.75 ÷ 3 = 25%

Apply the $60 pool

25% × $60 = $15

The daily computation is:

$$R = \$60\left( \frac{0.50+0.25+0}{3} \right) = \$15$$

One strong check does not lock in half of the daily pool. Remaining competitive through more of the day creates the larger opportunity.

Use LP Rewards in practice

1. Choose an active reward market. Check its daily pool, maximum spread, and minimum shares on Daily Rewards.
2. Place resting limit orders. Use GTC or GTD orders at prices you are willing to trade. API traders can use post-only to avoid taking liquidity immediately.
3. Keep useful size available. Only the shares still resting when Agara checks the book can score.
4. Follow your projection. Your share and Projected change with your orders, the midpoint, and the competing book.

Treat the projected amount as an estimate. Your orders can fill, the midpoint can move, and other traders can add or remove liquidity before the reward day ends.

An order is still a real trade offer. If someone accepts it, the fill changes your position and the filled shares stop providing liquidity. Never choose a price or size only for the projected reward.

Rules that prevent surprises

• Only a resting limit order can score. An order that fills immediately does not provide resting liquidity.
• Only the first 50 quotes per price level, per outcome and side, are considered at each check. Meeting the size and spread requirements alone is not enough if your quote is later in the queue.
• Filled and cancelled shares stop scoring at later checks. Disconnecting does not cancel your orders; reconcile the book and cancel stale quotes.
• A wider maximum spread does not make the boundary attractive. Quality still decays to zero at the edge.
• Projected is not guaranteed. It changes when the midpoint, your remaining size, your time in the book, or competitors' orders change.
• Rewards do not protect against inventory losses, adverse selection, fees, or market resolution risk.

For programmatic access, use the LP Rewards API reference. Use Orders to place and cancel quotes and the orderbook or market stream to keep them aligned with the live market.