“lending against prediction market positions demands a new risk engine where liquidation fails”
Lattica designs a shortfall-pricing risk engine that enables lending against collateralized prediction market positions, calibrated on Polymarket historical data. Uses Wang-distorted loss distributions within fixed-duration epochs to price lender tail risk where traditional liquidation-based lending fails due to bounded prices and discontinuous repricing. A dual-pool Monte Carlo simulation shows the risk engine pool earning 92.5% annualized return versus -27.2% for a flat-rate baseline.
Extensive technical background assumed
Platforms mentioned: Polymarket