Markets
Decentralized Exchange D8X to Offer Leveraged Polymarket Contract Trading Tool
D8X, a decentralized exchange (DEX) for perpetual cryptocurrencies, said it is working to bring leverage to Polymarket prediction markets.
In an interview with CoinDesk, D8X co-founder Caspar Sauter explained that the system works through a mechanism that retrieves spot prices from Polymarket using oracles, similar to traditional perpetual contract approaches, which use commodity prices.
Sauter believes that leverage is important in prediction markets because it improves trading efficiency and potential profits.
Leverage helps with risk management by allowing traders to hedge their positions more effectively.
Sauter explains that leverage allows users to “temporarily protect themselves from uncertainty” by taking positions that offset their existing bets, by combining their prediction market bets with existing crypto positions.
For example, if a trader holds a long position in a prediction market and becomes uncertain about the outcome, he or she can open a leveraged short position to mitigate potential losses.
“You can use it for risk management purposes, which is also the key use case for these types of products in traditional finance.”
Sauter explained that with D8X, the maximum leverage available depends on the state of the market. This approach, he said, prevents destabilization by ensuring that leverage limits are consistent with current market dynamics, thereby preserving stability and preventing a single trader from disproportionately affecting liquidity.
After all, derivatives markets are orders of magnitude larger than cash markets, Sauter says, and introducing leverage could improve market efficiency rather than deplete liquidity.
But for all the talk of market efficiency, at the end of the day, leverage allows Polymarket’s core traders, those with convictions, to get a better return on their beliefs, which is what the market demands.
“You can use less capital to potentially make a bigger profit than you can in the cash market,” he said. “People like to bet, and they like to bet big.”
D8X doesn’t have an exact date for the launch of the leveraged prediction market on mainnet, but Sauter said they are targeting August.