| 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
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
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
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
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
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.