> ## Documentation Index
> Fetch the complete documentation index at: https://docs.ultramarkets.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# Glossary

> Key terms and definitions used throughout 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    |

## Key Concepts Explained

<AccordionGroup>
  <Accordion title="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.
  </Accordion>

  <Accordion title="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.
  </Accordion>

  <Accordion title="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.
  </Accordion>

  <Accordion title="ERC-4626">
    An Ethereum standard for tokenized vaults. umUSD follows this standard, making it composable with other DeFi protocols that support ERC-4626 tokens.
  </Accordion>

  <Accordion title="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.
  </Accordion>
</AccordionGroup>