Early exit and the deferred claim
A VIZ market is a hybrid: entry and early exit go through the curve (as on an AMM), while positions held to the end are settled parimutuel (a common pool). Because of this, "profit from an early exit" is arranged more subtly than it looks. Let's go through why winnings from an early exit do not arrive immediately.
The gist in two paragraphs
When you exit early — cancel a bet (pm_cancel_bet) or close leverage (pm_leverage_close) — the curve price of your position may turn out to be higher than your stake. But that profit cannot be paid out right now: it is not backed by losers (the market is not resolved yet), and if it were paid out of the curve, the shortfall would fall on liquidity providers — and on VIZ an LP is principal-protected. That is why the profitable "tail" of an early exit is not cashed out on the spot.
Instead, the system returns your principal immediately and unconditionally (your own money, never more than the stake) and books the profitable tail as an outcome-contingent deferred claim. It is settled at settlement from a bounded slice of the losing pool — that is, only if your chosen outcome won and there is something in the pot to pay from. This keeps token conservation intact and prevents LPs from subsidizing traders.
How it works
The principal — immediately. A cancellation/close returns min(curve_price, your_stake) at once. An early exit can cut a loss or get you out flat, but it does not realize profit at the moment of exit.
The profitable tail — into a deferred claim. The difference max(curve_price − stake, 0) is booked as a claim on the outcome you chose. Not cash, but "if this outcome wins, we top you up at settlement".
Settled from a bounded pool. At resolution the claim is paid from a bounded slice of the losing pool (not from the curve, not from LP principal). If there is no loser money behind it, the payout is trimmed. No silent minting.
A fair entry price (protection against gaming). The "principal/tail" split is recomputed against the curve depth at the moment of your bet, not the current one. That closes the trick of "place a bet → add liquidity yourself → inflate the depth → withdraw a bigger tail": normalization can only decrease the payout, never increase it.
Why it works this way
- LPs are promised principal protection. If early-exit profit were paid from the curve, the shortfall (when profit outruns losing stakes) would be written off against LP principal or minted — both break the guarantee. The deferred claim moves the payout to settlement, where the source is losers, not LPs.
- Parimutuel is backed only by losers. A winner's profit is someone else's loss. Before resolution there are no "losers" yet — so there is nothing to pay the profit from right away.
What you need to understand
- On an early exit you take back principal, not profit. The profitable tail waits for resolution.
- The tail is contingent on the outcome. If your chosen outcome loses, there is no tail; if it wins, the tail is settled from the pot (within what is available).
- This protects LPs and conservation. The mechanism is deliberate, not a wallet limitation.
- Leverage follows the same principle. Leverage profit also arrives after resolution, from a bounded pool. See Leverage trader.
Related
- Bet cancellation — how the return on an early exit is computed.
- Leverage trader — why leverage profit is deferred.
- Active LP — whose protection this provides.
- Specification — the formal model of the deferred claim and the bounded slice.