# Synthetic Exposure

<mark style="color:$info;">When a user opens a leveraged directional position:</mark>

1. <mark style="color:$info;">The user's collateral is locked and, together with Underwriting Facility capital, funds the position construction on the underlying venue.</mark>
2. <mark style="color:$info;">Dimes constructs and maintains the hedge for the duration of the position.</mark>
3. <mark style="color:$info;">User PnL becomes a function of probability movement multiplied by leverage.</mark>
4. <mark style="color:$info;">Hedge PnL offsets user PnL so that Dimes remains neutral within defined liquidation constraints.</mark>

#### Hedge Mechanics

<mark style="color:$info;">For a long synthetic YES exposure, Multiply expresses the user position by acquiring the equivalent YES exposure on the underlying prediction market venue using facility capital.</mark> **The position produces gains or losses that mirror the user's PnL, keeping Dimes neutral to price direction.**

<mark style="color:$info;">If the position evolves favorably for the user:</mark>

* <mark style="color:$info;">the hedge pays out more than its acquisition cost,</mark>
* <mark style="color:$info;">the excess is transferred to the user as profit,</mark>
* <mark style="color:$info;">and the hedging facility recovers its original principal.</mark>

<mark style="color:$info;">If the position moves against the user:</mark>

* <mark style="color:$info;">the hedge pays out less than its acquisition cost,</mark>
* <mark style="color:$info;">the user's margin absorbs the loss through liquidation,</mark>
* <mark style="color:$info;">and the transferred loss restores the hedging facility's principal.</mark>