Guide · · Video walkthrough
What Happens When a Leveraged Polymarket Position Gets Liquidated?
This video answers two questions every leveraged trader should be able to answer before sizing up: can you trade Polymarket with leverage, and what actually happens when a leveraged position gets liquidated? It explains how your position is valued in real time, what triggers a forced close, and why the price that decides your liquidation often isn't the last traded price.
What the Video Covers
Liquidation is the safeguard that closes a leveraged position before its debt goes underwater. The video breaks down the core mechanics in plain language:
- Mark price, not last trade. Your position is valued in real time off a mark price — on PredMart, the best bid — not the last price someone happened to trade at. In a thin or fast-moving market those two can diverge, and it's the mark that decides whether you're liquidated.
- Loan-to-value (LTV). When you open a leveraged position you borrow against your collateral up to a loan-to-value limit (80% on PredMart, the same at any price). The closer your debt sits to that limit, the less room you have.
- The liquidation threshold. A position becomes liquidatable when its health factor falls below 1.0 — when the mark-valued collateral can no longer cover the debt with the buffer above LTV. PredMart's threshold is the 80% LTV plus a 10% buffer (90%).
- What triggers a forced close. A large enough price move against you, interest accruing on the loan over time, or both, can push the health factor below 1.0 — at which point the position is closed automatically to repay the loan.
- The safeguards. Real-time, depth-aware pricing and conservative risk parameters exist to protect both the trader and the lending pool during volatile moves.
Why It Matters
Leverage amplifies both gains and losses, so knowing where your real liquidation point sits — off the mark, not the last trade — is essential before sizing up on any prediction market. Get that wrong and a position you thought was safe can close during a single sharp move.
PredMart offers audited, non-custodial leverage on Polymarket positions. To go deeper on the mechanics in the video:
Learn More
- Liquidation — exactly how and when positions are closed
- Risk Parameters — LTV, health factor, and the liquidation buffer
- Leverage Trading on Polymarket — opening and managing leveraged positions