Fair value

Fair value

Fair value is the theoretical price level for outcomes in a single Polymarket market at which the sum of all outcome prices equals $1.00. For a binary market that means YES + NO = $1.00. For an N‑outcome market it means Σ price(outcome_i) = $1.00.

In plain terms, fair value is the arithmetic target markets gravitate toward when there is no arbitrage opportunity and prices reflect balanced supply and demand.

In context

You encounter fair value whenever you compare best asks across outcomes. PolyArb uses deviations from fair value as a scan signal: when the sum of best-ask prices is meaningfully below $1.00, the difference (the edge) represents the theoretical profit available by buying a complete set (or both legs in a binary). That arithmetic gap is the starting point for evaluating an arbitrage trade, but it is not an unconditional guarantee of profit.

Always pair the raw arithmetic edge with concrete risks: resolution risk (UMA disputes can delay or change settlement), slippage and partial fills on the CLOB, taker fees, tick-size limits, and the time required to split/merge/redeem CTF tokens and settle in pUSD. These factors can reduce or eliminate the practical opportunity even when the sum of best asks is below $1.00.

See also

• /glossary/edge
• /glossary/binary-spread