Introduction

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What is Ultramarkets?

Ultramarkets is the margin layer for prediction markets. Trade events on Polymarket with up to 10x buying power. Put up $1,000, control $10,000 in positions. You’re not betting on outcomes. You’re trading probability movements. Every position auto-closes before the event resolves, so you exit while prices are still moving smoothly, not during the chaotic final moments when markets snap to 0% or 100%.

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The Gap Risk Problem

Every attempt to add leverage to prediction markets has failed for the same reason: gap risk. Prediction markets resolve to binary outcomes. A market on “Will X happen?” settles at either $0 or $1. This creates a fundamental problem for leverage:

• You’re 10x long at 90% probability. Position value: $0.90
• Event resolves to “No”
• Price instantly gaps from $0.90 → $0.00
• Your margin can’t cover the loss
• Liquidation fails. Bad debt is created.

This isn’t a technical limitation. It’s a structural incompatibility between binary resolution and borrowed capital. Continuous assets like BTC or ETH can be liquidated smoothly because prices move gradually. Binary events gap. They jump from probable to certain in milliseconds. No oracle or margin requirement can protect against discontinuous price movement. This is why Polymarket, Kalshi, and every other prediction market caps leverage at 1x.

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How Ultramarkets Solves This

Ultramarkets eliminates gap risk with one architectural principle: We close all positions before the event resolves. We don’t avoid the gap by creating synthetic derivatives. We avoid it by exiting before the binary moment arrives. This isn’t derivatives on prediction markets. It’s leveraged execution in prediction markets. Traders hold real Polymarket positions. LPs earn yield without directional exposure. Gap risk disappears because positions are systematically closed before resolution.

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Why Prediction Markets Need Different Leverage

Traditional perpetual futures (perps) are designed for continuous assets like BTC, ETH, or commodities. These assets have no expiration date. Prices fluctuate indefinitely, and positions can theoretically be held forever. Prediction markets are fundamentally different. They are decaying assets governed by two forces:

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Time Decay

Every prediction market has an expiration. As resolution approaches, prices become increasingly volatile and liquidity often deteriorates. A position that’s healthy today might become dangerous tomorrow, not because the probability changed, but because time ran out.

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Truth Decay

Prediction markets converge toward certainty. As more information becomes available, probabilities move toward 0% or 100%. This isn’t gradual price discovery. It’s a countdown to binary resolution. The closer you get to resolution, the more violently prices can move.

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Why Perp Mechanics Don’t Work

Perpetual futures rely on:

• Funding rates to keep prices aligned with spot. But prediction markets don’t have a “spot” price to anchor to.
• Gradual liquidations that assume prices move smoothly. But binary markets gap.
• Unlimited duration that assumes positions can wait out volatility. But prediction markets expire.

Applying perp mechanics to prediction markets creates systemic risk. Funding rates become arbitrary. Liquidations fail at the worst moments. The entire model breaks down.

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The Ultramarkets Approach

By acknowledging that prediction markets are decaying assets with binary endpoints, Ultramarkets can offer leverage safely. You trade probability volatility during the liquid period, then exit before the gap.