Introduction

In prediction markets, “bonding” means buying a contract near $1, often 95–99¢, and holding it until it settles at $1. The position resembles a short duration zero-coupon bond, hence the name.

The strategy is about taking low risk trades frequently or in size to collect yield.

Example bonding strategies:

• Post-Event Bonding: Buy after a real world result appears known but before tha market has settled.
• Near Expiry Bonding: Buy a 97-99c outcome shortly before the event concludes (BTC far above a strike seconds before expiry).
• Passive Limit Order Bonding: Leave a bid at 95-99c¢ at the end of a market and wait for impatient sellers. Better entry prices and lower fees dramatically improve the yield, but you are most likely to get filled precisely when new information makes the fair value worse.

Today we're going to focus on near expiry bonding on the crypto 5 minute markets.

Bonding in Action

Account: BoneOhio

• Profile: https://polymarket.com/@boneohio?tab=activity
• PnL: +$317k since end of March
• Avg Trade Value: ~$335.95
• Median Trade Value: ~$27.77

80% of BoneOhio's trades are buying up or down on 5 minute markets where the market is about to expire in < 30 seconds. BoneOhio is making 50k a month via this bonding strategy with just $335 per trade on average.

Here is how you can find and execute a similar strategy.

Bonding Strategy

Z Score

A z-score tells you how far something is from “normal,” measured in standard deviations.

z-score = (value - average) / standard_deviation

You can use this to calculate the fair value in a bonding strategy by backtesting against average cryptoasset volatility during the epoch and see if you have an edge by using log returns.

log_distance = log(current_price / strike)

z = log_distance / (sigma * sqrt(time_remaining / epoch_length))

You get the average fair price using this. Then buy up or down if price is safely on the correct side of the strike by enough volatiltiy buffer. Make sure to account for fees and slippage. Anything with edge after accounting for fees and slippage above 0 is good as long as you are calculating the z score correctly and adjusting for volatility conditions.

If your model is incorrect, you could still lose even though it seems like you have a positive edge.

Order Book Depth

Now take the depth chart. We can see there is almost 20 BTC in resting bids under the current price, the green area in the chart. While above the current price there is just 1 BTC in asks, the red area in the chart.

There is a huge buy wall supporting the current price without much liquidity on the other side. This would be a strong confirmation of us buying a $BTC "UP" contract in a bonding strategy if we had an edge over the fair value, this buy wall means it is less likely to flip at the last second.

The depth chart can change quickly so don't rely on it if you are holding a bonding strategy for an extensive period of time, more than 15-20 seconds.

In Conclusion

Near-expiry bonding can turn small, repeatable pricing gaps into meaningful returns, but the edge depends on the execution quality of your model.

A sound volatility model should determine fair value, while fees, slippage, liquidity, and real-time order-book depth help confirm whether a trade is worth taking.

In futures articles, we will cover other trading strategies you can execute.