Varla Protocol

Built from the ground up for prediction markets. Every design decision optimizes for the unique properties of prediction market collateral.

Cross-Margin Lending

Portfolio-level collateral management, not isolated positions.

Tiered Risk System

Dynamic LTV (50-80%) based on market liquidity and volatility.

Non-Custodial

Your positions, your control — smart contract escrow only.

Permissionless Liquidations

Fully on-chain, transparent, and incentivized.

Cross-Margin Architecture

Most lending protocols use isolated vaults — each collateral type requires a separate loan. Varla uses cross-margin, where all your positions combine into a single collateral pool.


Example Portfolio:
├── Election Market YES:     $500  (65% LTV)
├── Sports Market YES:       $300  (65% LTV)
└── Crypto Market YES:       $200  (80% LTV)
────────────────────────────────────────────
Total Collateral Value:    $1,000
Weighted Max Borrow:         ~$680

ONE position to manage, ONE health factor


Position A: $400 ──► Separate vault, separate HF
Position B: $300 ──► Separate vault, separate HF
Position C: $300 ──► Separate vault, separate HF

✗ Multiple positions to track
✗ Can't offset gains/losses
✗ Less efficient

Tiered LTV System

Not all prediction markets are equal. Varla assigns risk tiers to each market based on objective criteria.

Tier	LTV	Criteria	Examples
Conservative	80%	High liquidity (>$1M depth), established	Major elections, flagship events
Moderate	65%	Standard liquidity, active trading	Regular markets, popular topics
Risk	50%	Lower liquidity, higher volatility	New markets, niche events

Tier LTVs are protocol defaults (80/65/50%). Governance can set per-position overrides that only reduce LTV — never increase it.

Non-Custodial Design

Smart Contract Escrow

When you deposit collateral, it's held by the VarlaCore smart contract — not a company, not an individual. The code is the custodian.

Defined Release Conditions

The contract can only release your collateral under specific conditions: you repay your debt (full withdrawal), or you're liquidated (partial seizure to repay debt). No other release paths exist.

Verifiable On-Chain

All operations are transparent and auditable. You can verify exactly where your collateral is at any time on the block explorer.

Permissionless Liquidations

When a position becomes unhealthy (health factor < 1.0), anyone can liquidate it. Multiple liquidators compete, ensuring fast resolution with no single point of failure.

Health Factor	Bonus	Rationale
~1.0 (just liquidatable)	~5%	Minimal incentive needed
~0.9	~10%	Moderate urgency
≤ 0.8	~15%	High urgency, max incentive

Conservative Oracle Design


Final Price = min(Spot Price, TWAP)

• Attackers can't pump spot price to inflate collateral
• TWAP provides resistance to short-term manipulation
• Lenders are protected from artificially inflated collateral

Prices older than 15 minutes (default) are considered stale. Borrowing/withdrawing on stale data is blocked. A grace period after oracle recovery protects users from immediate liquidation.

Positions in illiquid markets can't be used as collateral. Minimum $10,000 orderbook depth required. This prevents use of manipulable thin markets.

Lender Protection

10% of all borrower interest goes to a protocol reserve fund. This provides first-loss coverage for bad debt — lenders are protected before the protocol takes risk.

Supported Chains

Chain	Prediction Market	Collateral Token
Polygon	Polymarket	USDC
BSC	Opinion	USDT