Market Resolution

How Varla handles prediction markets approaching and reaching resolution — early-closure decay, forced closure, and post-resolution mechanics.

The Resolution Problem

Prediction markets resolve to exactly $0 or $1 at a specific deadline. A position worth $0.65 today could be worth $0 tomorrow. Traditional lending can't handle this — Varla's early-closure system can.

Early-Closure Decay

As a market approaches resolution, Varla progressively reduces the effective LTV of positions in that market. This forces borrowers to either repay debt or add collateral before the resolution date.

Days to resolution    Effective LTV (Conservative tier)
──────────────────    ─────────────────────────────────
> 30 days             80% (full LTV)
  30 days             80% → begins decaying
  14 days             ~60%
   7 days             ~40%
   3 days             ~20%
   1 day              ~5%
   0 days             0% (no borrowing capacity)

Don't wait until the last day. As LTV decays, your health factor drops and you may get liquidated. Repay debt or add other collateral well before the resolution date.

What Happens at Resolution

Outcome	Position Value	What Happens
Winner (YES resolves YES)	$1.00	Collateral fully valuable, debt unchanged. Borrower can repay and withdraw $1/share.
Loser (YES resolves NO)	$0.00	Collateral worthless. If debt outstanding, position is liquidated/bad-debt handled.

Post-Resolution

After a market resolves, the oracle marks the position at its final value ($0 or $1). Winning positions can be redeemed on the prediction market platform and the proceeds used to repay Varla debt. Losing positions trigger the bad debt waterfall if debt remains.

Varla doesn't automatically redeem resolved positions. After repaying your Varla debt, withdraw your resolved positions and redeem them on the prediction market platform.