Leverage trader: betting on price with a loan from the pool

Leverage is a separate instrument on top of a market. You are betting not "on the outcome until the end", but on the movement of the price of an outcome, and you borrow from the lazy pool to amplify the position. This is closer to margin trading than to an ordinary bet.

The gist in two paragraphs

You post collateral and open a leverage position (pm_leverage_open): the system borrows the missing amount from the lazy pool and places the enlarged size on the chosen outcome. While the outcome's price moves your way, unrealized profit grows; against you, the position approaches liquidation. For the loan you pay the pool a flat markup (~10%) and a funding rate over time; that is the income of passive LPs.

Leverage does not wait for the oracle: the position is force-closed at the price at the moment betting closes (betting_expiration) — leverage settles at the market price, not at the announced outcome. If the price hits the threshold earlier, the position is liquidated by a "sweep". Leverage profit is booked as a deferred claim and paid out after the market resolves (from a bounded pool of losers), not instantly.

What happens, step by step

Opening. pm_leverage_open: you post collateral and set the leverage. The pool issues the loan (pool.free_balance -= loan), and the total size is bet on the outcome. You can only open if at least 24 hours remain until betting_expiration — otherwise the position has no room to live, and the opening is rejected.

While open. The outcome's price drifts with bets. Your way — profit grows; against you — liquidation approaches. The funding rate accrues in favor of the pool. You pay for leverage as long as you hold the position.

Closing at will. pm_leverage_close — you exit at the current price: the loan is returned to the pool and you take your share (cancel_value). The spread/floor remainder (curve_residual) is routed into the market's forfeit_pool (it goes to winners at settlement) — money does not "freeze".

Liquidation. If the price reaches the threshold, the position is closed automatically (sweep). The collateral repays the loan to the pool; whatever is left follows the settlement rules.

Force-close at the betting close. If you did not close it yourself, at betting_expiration the position is force-closed at that moment's price. Leverage does not depend on the oracle's resolution: it is about price, not about "who turns out to be right".

Profit payout. Leverage profit is not instant cash: it is a deferred claim settled after the market resolves, out of a bounded pool of losing stakes/forfeits (with a cap on the payout). This way the system does not mint tokens out of thin air.

What a leverage trader needs to understand

• You bet on price, not on the outcome. Leverage closes at the price when betting closes, not at the oracle's announcement. You can call the "price" right and never see the outcome — those are different things.
• The loan comes from the pool, and it is not free. The flat markup plus the funding rate go to the lazy pool. Holding a position for a long time is expensive; funding works against you over time.
• Liquidation is real. A move against you closes the position by force, and the collateral repays the loan. Leverage amplifies both profit and loss.
• The 24-hour window. You cannot open leverage if less than a day remains until betting closes — the position needs room to exist and to close correctly.
• Profit arrives after resolution. Do not count on instantly withdrawing leverage winnings: they are booked as a deferred claim and settled at market settlement, within the available pool.
• An instrument for those who understand it. Leverage is more complex than an ordinary bet; if you want a simple bet on the outcome, see the "Bettor" article.

Roles next to yours

• Passive LP (lazy pool) — the one you borrow from; your markup and funding are their income.
• Bettor — bets on the outcome without a loan and without liquidation; the simpler path.
• Oracle — resolves the market; it affects your leverage indirectly (profit is settled after resolution), but the leverage close is tied to price, not to their verdict.

Further reading: "Passive LP (lazy pool)" (the other side of your loan), "Leverage — the mechanism" (markup and liquidation formulas), "Early exit and the deferred claim" (how and when leverage profit arrives).