Market makers
Inventory management
Your inventory is the net shares you hold on each outcome of each market. Inventory management is the discipline of keeping that number close to your target as fills come in.
Inventory is risk
Every share you hold at resolution either pays 1 USDC or zero. Inventory you forget about is the most common way market makers lose money on SatoriEx.
Signals to watch
Lightweight monitoring is enough โ you do not need a full risk engine to stay safe.
- Net shares per outcome โ should oscillate around zero.
- Fill skew โ one-sided fills mean your quote is mispriced relative to flow.
- Price drift โ if mid is moving faster than your quotes, lift your quotes.
- Time to resolution โ risk profile changes dramatically in the final 24 hours.
Unwind tactics
When you are caught with inventory, you have a small toolbox. None of these are magic; they are just disciplined exits.
| Situation | Tactic |
|---|---|
| Modestly long the wrong side | Quote tighter on the side you want to lift; widen on the side you want to keep. |
| Heavily one-sided after a news shock | Cancel resting orders, market-sell a calibrated chunk, then re-quote at new mid. |
| Price moving faster than your quotes can update | Pull all quotes; do not re-quote until the move settles. |
| Holding inventory in final 24 hours before resolution | Decide whether you actually want directional exposure into resolution; if not, exit. |
KPIs to track
These four numbers tell you whether your quoting is working without needing per-trade analysis.
- Net exposure โ Sum of |shares ร current mid| across every position. Lower is healthier.
- Realised P&L per day โ What actually landed in your balance. Positive over a fair sample of markets means your edge is real.
- Inventory half-life โ Average time to halve a one-sided position. Shorter is healthier.
- Fill rate per side โ Buys vs sells should be roughly balanced. Persistent imbalance means your mid estimate is off.
Inventory at resolution
Any shares you hold when the market resolves pay 1 USDC if they are on the winning outcome, zero otherwise. If you do not want resolution exposure, exit before halt โ the dispute window will not let you change your mind afterward.