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Likely is the most capital-efficient prediction market in existence. We recognize that in a high-interest-rate environment, idle capital is a cost. We’ve built our exchange to ensure that every dollar you deposit is working for you, focusing on real yield rather than dangerous leverage.

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Yield-Bearing Collateral: Ethena USDe

Most exchanges require you to hold your collateral in static USDC. While your trade is open (which could be weeks for a long-term prediction), that capital earns nothing for you. On Likely, you can deposit and trade using Ethena USDe. This means your trading collateral is a yield-generating asset. You are earning while you wait for the market to move.

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The Split/Merge Mechanic

Capital efficiency isn’t just about yield; it’s about flexibility. Our Split/Merge system allows you to create your own liquidity on demand.
  • Split: Convert $1.00 USD into 1 YES + 1 NO share.
  • Merge: Convert 1 YES + 1 NO share back into $1.00 USD.

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Why this is Efficient:

In traditional markets, you have to find a counterparty for every specific share. On Likely, if you think YES is undervalued, you can Split your capital, sell the NO shares to a market maker, and keep the YES shares. You are never “stuck” waiting for a specific side of a trade to appear you create the inventory yourself.

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Atomic Arbitrage

Our Bundle system allows for atomic arbitrage, which ensures that capital is never trapped in “half-finished” trades. If an arbitrage opportunity exists between Market A and Market B:
  1. You submit a bundle to buy A and sell B.
  2. If B isn’t available, A is never bought.
  3. Your capital remains free and ready for the next opportunity.

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The Protocol Vault (Indirect Investment)

When takers pay tips for priority, those funds enter the Protocol Vault. Unlike other platforms where fees just become company revenue, Likely treats these tips as an indirect investment from the traders.
  • Ownership: You “own” a percentage of the vault proportional to your tip contributions.
  • Yield: While you cannot withdraw the principal (the tips themselves), you can withdraw a profit split based on a high-watermark.
  • Efficiency: Your cost of priority becomes a productive asset that fuels global liquidity and can potentially return yield to you.

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The Case Against Leverage

You might notice that Likely does not offer margin or leverage. This is a deliberate choice for the safety of our users and the stability of the market. Leverage in prediction markets is often described as “suicide” for several reasons:
  • Oracle Risk: There are no reliable, high-frequency oracles to trigger safe liquidations in prediction markets.
  • Liquidity Gaps: Prediction markets rarely have the massive, instant liquidity required to process liquidation events without causing total collapse.
  • Inherent Leverage: By design, prediction shares are already leveraged instruments. If you buy a YES share at $0.10, you are essentially looking at a 10x payout if you’re right. Adding more leverage on top of this makes the system unsustainable.
By focusing on Capital Efficiency (Yield via USDe, Split/Merge, and the Protocol Vault), Likely makes your capital work harder without the extreme risks of borrowed power.

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Summary of Benefits

Likely allows you to trade with the precision of a quantitative fund while maintaining the capital efficiency of a yield farmer.

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Next Steps