“prediction markets are becoming financial derivatives with real leverage and gap risk”
DWF Ventures argues prediction markets are evolving into a financial derivatives asset class. The piece analyzes structural barriers to leverage and collateral lending: jump risk, binary valuation and regulatory uncertainty. It surveys emerging solutions including epoch-based fee models, perpetual futures on outcomes and tokenised positions on Solana.
Some technical background helpful
Platforms mentioned: Polymarket, Kalshi, Solana, dYdX