Portfolio Margin: The Capital Efficiency Game-Changer

Traditional prediction markets force you to margin each position separately. Want to provide liquidity across 10 markets? Lock up capital in 10 places.

This isn't just inconvenient—it's economically prohibitive.

Here's the problem: A market maker with $100K can only deploy ~$10K per market if trading 10 markets with isolated margin. Their capital sits idle. Their returns are capped by what they can't do, not what they can.

Portfolio margining changes everything:

Instead of evaluating each position in isolation, the system looks at your total risk. Short AAPL earnings beating and long AAPL stock? Those positions offset. The system margins your net exposure, not your gross positions.

The result: 5-10x capital efficiency.

That same market maker with $100K can now provide meaningful liquidity across all 10 markets. Not $10K each, but $50-100K equivalent exposure because offsetting positions reduce margin requirements.

This is how institutions trade. This is how derivatives markets scaled. This is how professional market-making becomes economically viable.

Netty implements a three-tier margin system:

• Initial margin (trading threshold)

• Maintenance margin (liquidation warning)

• Close-out margin (forced liquidation)

Combined with a gradual liquidation waterfall and insurance fund, you get institutional-grade risk management without the institutional gatekeepers.

The punchline: Capital efficiency isn't a luxury feature. It's the difference between a market that's liquid and one that's not. Between market makers who can afford to quote and ones who can't. Between a platform that scales and one that stays small.

Portfolio margin is how prediction markets grow up.