Position Lifecycle

How positions are opened, monitored, hedged, and settled.

This section describes how a leveraged prediction market position moves from creation to settlement. All user actions occur through the originating front-end. Dimes executes and maintains the underlying hedge and synthetic exposure through Multiply.

1

Opening a Position

The user selects:

• a supported prediction market

• a direction (YES or NO)

• a leverage level

2

The terminal requests a quote from Multiply, passing:

• market ID and trader ID

• side (YES/NO)

• requested leverage

• notional size

3

Multiply evaluates:

• current venue price and order book depth

• hedgeability of requested size within slippage bounds

• required collateral and margin

• maximum allowable leverage for that market, side, and trader

• per-market, per-side, and per-user cap headroom

4

Multiply returns a firm executable quote that includes:

• entry price and fully-loaded execution cost

• required collateral

• maximum allowed size (if clipped by caps or depth)

• implied liquidation price

5

Hedge-first execution

If the user accepts, the front-end submits an execute call. Multiply executes the hedge on the external venue first. Only if the hedge fills within slippage bounds is the position created — user collateral is locked, and the synthetic leveraged exposure is established. If the hedge fails or slippage exceeds bounds, the order is rejected and no position is created.

6

Active monitoring

The position becomes active and appears in the front-end's portfolio view. Once active:

• Multiply monitors margin, venue health, depth, spread, and eligibility continuously

• Limits and maximum leverage evolve dynamically based on market conditions

• The market may enter close-only if any eligibility threshold is breached

7

Position enters hazard window (optional)

• A position enters the hazard window when the underlying market reaches a point where the outcome can resolve without passing through intermediate tradable prices.

• Then, Multiply computes the remaining financed amount (D) and determines whether the user holds sufficient mark-to-market value to support Soft Carry or, once live, Insured Carry.

• If the user cannot support financed exposure at this boundary, the position simply moves to fully paid-for size before hazard, ensuring the user enters hazard solvent but without leverage.

8

Leverage decay (J-factor)

• As the position ages and approaches resolution, Multiply systematically reduces leverage along a predetermined decay schedule. De-risking parameters are fixed at position entry based on time-to-resolution, depth profile, and open interest microstructure. Live market data triggers execution of each decay phase. The corresponding hedge is unwound proportionally as leverage decreases.

• By the time the market enters its hazard window, UF exposure has reached zero. The user may retain a residual unleveraged position.

9

Liquidation (if triggered)

• If the user's remaining collateral falls to maintenance margin at any point during the position lifecycle, Multiply liquidates the position immediately. The hedge is unwound on the originating venue, all execution costs are deducted from the user's collateral, and UF is made whole before the user receives any residual value.

10

Settlement

• The market resolves. Multiply settles the user's synthetic position and releases or distributes collateral accordingly. The front-end receives a final settlement message including the outcome, PnL, fees, and position metadata. The user's portfolio updates immediately.