Ultramarkets Is a Prime Broker
In traditional finance, a prime broker provides execution, custody, and financing to institutional traders. The broker doesn’t take the opposite side of trades. It facilitates access to markets with borrowed capital. Ultramarkets operates the same way:| Function | What We Do |
|---|---|
| Lend capital | For leveraged positions |
| Execute trades | On Polymarket |
| Hold custody | Of position shares |
| Manage risk | Through liquidation and auto-close |
We’re not a counterparty. We’re infrastructure.
How Capital Flows
The Lifecycle of a Leveraged Trade
1
Deposit
Trader deposits $1,000 margin
2
Borrow
Vault lends $9,000 (10x leverage)
3
Execute
We execute $10,000 position on Polymarket
4
Custody
Position is held in Ultramarkets custody
5
Close
Trader closes or gets liquidated
6
Recover
Vault recovers $9,000 + fees
7
Return
Trader receives remaining equity
Execution Risk vs Directional Risk
This distinction matters for understanding what LPs are actually exposed to.Directional Risk
Exposure to whether an event happens. If you bet Trump wins and he loses, you lose money.Ultramarkets LPs have zero directional risk. They don’t care who wins.
Execution Risk
Exposure to whether positions can be closed cleanly. Can we liquidate before losses exceed margin? Can we exit before resolution?This is what LPs are exposed to.
Our entire risk management system (market selection, early liquidation, force-close) exists to minimize execution risk.
Why This Matters
Lending Protocols (Aave, Compound)
- Face bad debt when collateral values drop faster than liquidation can execute
- The borrowed asset stays in the protocol
- Utilization affects rates
Ultramarkets
- Faces bad debt when positions can’t be closed profitably
- The borrowed capital leaves the protocol
- Utilization affects withdrawal availability, not rates
These are related but distinct risk models. Understanding the difference helps LPs evaluate what they’re actually exposed to.