Glossary - Ultramarkets

Term	Definition
Margin	USDC you deposit to open a leveraged position
Health	Percentage measuring your buffer before liquidation. Starts at 100%, liquidation at 45%
Leverage	Multiplier on your margin. 10x means $1,000 margin controls $10,000 position
Liquidation	Forced closure of your position when health drops to 45%
NAV	Net Asset Value. Total vault assets divided by total umUSD supply
Position	Your leveraged trade on a prediction market
Profit sharing	10% of trader profits that flow to LPs
umUSD	Vault token representing your share of LP capital
USM	Ultra Security Module. Insurance pool that absorbs bad debt before LPs
Utilization	Percentage of vault capital currently deployed to positions
Gap risk	Risk of discontinuous price movement at binary resolution
Force-close	Automatic position closure at market close date
Prime broker	Model where we lend capital and execute trades, rather than taking counterparty risk

Term

Definition

Margin

USDC you deposit to open a leveraged position

Health

Percentage measuring your buffer before liquidation. Starts at 100%, liquidation at 45%

Leverage

Multiplier on your margin. 10x means $1,000 margin controls $10,000 position

Liquidation

Forced closure of your position when health drops to 45%

NAV

Net Asset Value. Total vault assets divided by total umUSD supply

Position

Your leveraged trade on a prediction market

Profit sharing

10% of trader profits that flow to LPs

umUSD

Vault token representing your share of LP capital

USM

Ultra Security Module. Insurance pool that absorbs bad debt before LPs

Utilization

Percentage of vault capital currently deployed to positions

Gap risk

Risk of discontinuous price movement at binary resolution

Force-close

Automatic position closure at market close date

Prime broker

Model where we lend capital and execute trades, rather than taking counterparty risk

Key Concepts Explained

Gap Risk

The risk that prices will “gap” — jump instantaneously without passing through intermediate prices. In prediction markets, this happens at resolution when prices snap from any probability to either 0% or 100%. Traditional liquidation mechanisms can’t protect against gaps because there’s no time to execute.

Time-Boxed Positions

Positions that have a predetermined close date before the underlying event resolves. This architectural choice eliminates gap risk by ensuring all positions are closed while markets are still trading continuously.

Health

A percentage that measures how much equity remains in your position relative to your initial margin. Starting at 100%, it decreases as the market moves against you. At 45%, your position is liquidated.

ERC-4626

An Ethereum standard for tokenized vaults. umUSD follows this standard, making it composable with other DeFi protocols that support ERC-4626 tokens.

Prime Broker Model

A financial services model where the broker provides capital, execution, and custody services without taking the opposite side of trades. Ultramarkets operates this way — we’re infrastructure, not a counterparty.

​Key Concepts Explained

Key Concepts Explained