“prediction markets can't offer real leverage until financiers stop pricing jump risk over full epochs”
Kaleb (Polychain) breaks down why leverage is deceptively hard in prediction markets. The core problem is jump risk — binary markets can resolve instantly to $0 with no liquidation window, meaning financiers must pass expected jump losses back to traders as upfront fees. But a fairly priced upfront fee cancels out the leverage benefit entirely. His solution: short epoch-based pricing (like perps funding) where the financier only prices gap risk over a few hours at a time, rolling forward.
Some technical background helpful
Platforms mentioned: Polymarket, Kalshi