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Polymarket Configuration

This guide covers the specific setup required for Polymarket integration, including creating proxy contracts and configuring trading parameters.

Overview​

PolyOracle AI integrates directly with Polymarket's APIs to:

  • Fetch market data and orderbook information
  • Place buy and sell orders
  • Monitor positions and balances
  • Execute trading strategies

Prerequisites​

Before configuring Polymarket:

  • Web3 wallet with Polygon network configured
  • USDC on Polygon for trading
  • Polymarket account with API access

Step 1: Create Polymarket Account​

  1. Visit Polymarket

  2. Complete Account Setup

    • Verify email if required
    • Complete any KYC requirements

  3. Generate API Keys

    • Navigate to Account Settings → API
    • Create new API key and secret
    • Save these securely for your .env file

Step 2: Create Proxy Contract ⚡ Critical​

The proxy contract is essential for the agent to trade on your behalf.

Manual Proxy Creation (Current Method)​

  1. Connect to Polymarket

    • Visit polymarket.com
    • Connect with your trading wallet (the one whose private key you'll use)

  2. Trigger Proxy Creation

    • Try to place any trade or interaction that requires the proxy
    • Polymarket will prompt you to create the proxy contract
    • Approve the transaction in your wallet

  3. Find Your Proxy Address

    • After creation, the proxy address will be displayed
    • You can also find it in your wallet's transaction history
    • Copy this address for configuration

Future: Automated Proxy Creation​

The system is designed to support automatic proxy creation. To enable this:

# In backend/src/polyoracle/polymarket.py
# Change this line from:
self._init_approvals(False)
# To:
self._init_approvals(True)

⚠️ Note: This should only be run once and will create the proxy automatically when you first start make lg-server.

Step 3: Configure Environment Variables​

Add the following to your .env files:

Backend Configuration​

# Polymarket API
POLYMARKET_HOST=https://clob.polymarket.com
POLYMARKET_API_KEY=your_polymarket_api_key
POLYMARKET_API_SECRET=your_polymarket_secret

# Wallet Configuration
POLYGON_WALLET_PRIVATE_KEY=your_wallet_private_key

# Proxy Address (from Step 2)
NEXT_PUBLIC_POLYMARKET_PROXY_ADDRESS=0xYourProxyContractAddress

Frontend Configuration​

# Proxy and Token Addresses
NEXT_PUBLIC_POLYMARKET_PROXY_ADDRESS=0xYourProxyContractAddress
NEXT_PUBLIC_USDCE_ADDRESS=0x2791Bca1f2de4661ED88A30C99A7a9449Aa84174

Step 4: Fund Your Trading Wallet​

  1. Get USDC on Polygon

    • Bridge USDC to Polygon network
    • Or buy USDC directly on Polygon DEX
    • Send to your trading wallet address

  2. Minimum Recommended Balance

    • Start with $100-500 USDC for testing
    • Consider gas fees (small amounts of MATIC)

  3. Verify Balance

    # Test your setup
    cd backend
    make lg-server
    # Check logs for wallet balance confirmation

Step 5: Test Polymarket Integration​

Backend Testing​

  1. Start the Agent

    cd backend
    make lg-server

  2. Check Connection Logs Look for log messages confirming:

    • ✅ Polymarket API connection successful
    • ✅ Wallet balance loaded
    • ✅ Proxy contract configured

  3. Test Market Data The agent should be able to fetch market information without errors

Frontend Testing​

  1. Start Frontend

    cd frontend  
    pnpm dev

  2. Connect Wallet

    • Use the same wallet as your trading wallet
    • Verify proxy address appears correctly

  3. Test Market Analysis

    • Try analyzing a market
    • Verify data loads properly

Trading Configuration​

Risk Settings​

Configure trading parameters in the backend:

# In your agent configuration
MAX_POSITION_SIZE = 100  # Maximum USDC per trade
MIN_CONFIDENCE = 0.7     # Minimum confidence for trades
MAX_SPREAD = 0.05        # Maximum bid-ask spread to trade

Market Selection​

The agent can be configured to trade specific types of markets:

# Market filters
MIN_VOLUME = 1000        # Minimum daily volume
MIN_LIQUIDITY = 5000     # Minimum total liquidity
MAX_TIME_TO_CLOSE = 30   # Maximum days until market close

Advanced Configuration​

Custom Market Categories​

Filter markets by category:

PREFERRED_CATEGORIES = [
    "Politics",
    "Economics", 
    "Sports",
    "Crypto"
]

Research Depth Settings​

Configure research intensity:

RESEARCH_CONFIG = {
    "max_depth": 3,           # Recursive research depth
    "sources_per_query": 10,  # Sources to analyze per query
    "max_research_time": 300  # Max seconds for research phase
}

Security Considerations​

Wallet Security​

  1. Dedicated Trading Wallet

    • Create a separate wallet just for PolyOracle AI
    • Never use your main wallet for automated trading

  2. Private Key Storage

    • Store private key securely in .env file
    • Use hardware wallet for key generation
    • Regular key rotation for high-volume trading

  3. Position Limits

    • Set maximum position sizes
    • Implement daily trading limits
    • Monitor unusual activity

API Security​

  1. API Key Permissions

    • Use minimum required permissions
    • Regularly rotate API keys
    • Monitor API usage logs

  2. Network Security

    • Use secure connections only
    • Consider VPN for additional security
    • Monitor for unusual API calls

Troubleshooting Polymarket Issues​

Common Connection Problems​

"Invalid API credentials"

  • Verify API key and secret are correct
  • Check if API keys have necessary permissions
  • Ensure no extra spaces in environment variables

"Proxy contract not found"

  • Verify proxy address is correct
  • Check if proxy was created for the right wallet
  • Confirm proxy is deployed on Polygon network

"Insufficient balance"

  • Check USDC balance in trading wallet
  • Verify wallet has MATIC for gas fees
  • Confirm funds are on Polygon network (not Ethereum)

Market Data Issues​

"Market not found"

  • Some markets may be delisted or closed
  • Verify market ID format
  • Check if market is still active

"Orderbook empty"

  • Market may have low liquidity
  • Try different markets for testing
  • Check if market is near expiration

Trading Errors​

"Order rejected"

  • Check order size against available balance
  • Verify order parameters are within limits
  • Ensure market is still accepting orders

"Gas estimation failed"

  • Increase gas limit in configuration
  • Check MATIC balance for gas fees
  • Verify network connectivity

Monitoring and Maintenance​

Regular Checks​

  • Monitor wallet balance and positions
  • Review trading performance metrics
  • Check API usage and costs
  • Verify proxy contract functionality

Performance Optimization​

  • Adjust research depth based on results
  • Fine-tune confidence thresholds
  • Optimize position sizing strategies
  • Monitor and reduce API costs

Next Steps​

After successful Polymarket configuration:

  1. Analyzing Markets - Learn how to analyze markets
  2. Trading Guide - Understand the trading process
  3. Performance Monitoring - Track your agent's performance

Need help with Polymarket issues? Check the Troubleshooting Guide for Polymarket-specific solutions.