Understand how Unihedge turns forecasts into positions.

WHAT IS UNIhedge?

Unihedge is a decentralized prediction market built on Reverse Harberger Tax (RHTAX). It transforms forecasts into tradable positions, where early insight earns value.

WHAT IS HARBERGER TAX?

The Harberger Tax is an economic idea where every asset remains continuously available for sale. The owner:

• declares the asset’s value,
• pays a recurring tax based on that self-assessed price,
• must sell to anyone at that declared price.

Example: Alice owns a house. She sets its price at $100,000 and pays a 1% yearly tax ($1,000). If Bob offers $100,000, Alice must sell it to him. Bob becomes the new owner and sets his own price. This keeps ownership dynamic and open.

WHAT IS REVERSE HARBERGER TAX (RHTAX)?

Unihedge adapts the Harberger principle for expiring assets — time-limited positions that exist only for a defined period, such as futures contracts or auction bids that close after a set time.

In the classic Harberger model, owners pay a continuous tax on their declared value at a fixed rate to discourage static ownership. Unihedge reverses this logic: the tax rate itself depends on how close the position is to its expiry.

How it works:

• You declare the value of your position — your buyout price.
• A tax is calculated once at purchase, using your declared value and a rate tied to the remaining time before expiry.
• The shorter the expiry, the higher the rate — while longer expiries are taxed less (roughly following 1/√t).
• Anyone can acquire your position anytime by paying your declared price plus its current RHTAX obligation.

The idea behind RHTAX is simple. The earlier you take a position, the less it costs to enter. As time moves closer to expiry, replacing that position becomes more expensive. This rewards early discovery and keeps positions actively traded instead of locked until the end.

WHAT IS A POSITION?

A position is a temporary claim on a specific price range at a future time — for example, ETH between $2,900 and $3,000 tomorrow. You can buy a position, set your buyout price, and keep it until someone pays to take it over or until the market reaches its expiry.

HOW DO I ACQUIRE A POSITION?

You can buy an existing position by paying the current owner's buyout price, or claim an unowned one directly. At purchase, you set your own buyout price — the value that determines your RHTAX amount.

Every claimed position carries an RHTAX based on your declared price and how soon it expires. This ensures that each owned position contributes fairly to the market from the moment it’s taken.

WHY SHOULD I BUY A POSITION?

You can profit in two ways:

• When the market begins to align with your forecast, other traders will recognize the value of your position and pay your buyout price to take it over.
• If no one can profitably replace you and your price range matches the final market outcome at settlement, you receive the reward from the pool.

In short — insight creates opportunity, and accurate positioning turns it into profit.

HOW DOES HEDGING WORK HERE?

Unihedge still works as a form of decentralized insurance: you can protect yourself against unfavorable price moves by taking the opposite position in the market.

What makes it different is how the cost and payoff behave. The reward pool grows predictably through the flywheel, so professional hedgers can estimate future payouts and enter before speculators drive prices up. This turns traditional risk coverage into a strategic, yield-bearing opportunity.

By entering early in less crowded ranges, hedgers gain cheaper access and a clear view of potential rewards. As markets shift and attention follows, those early positions can be sold for profit or held through settlement for the final payout.

It’s still insurance — just redefined as informed positioning in a live, self-balancing market.

WHY NOT USE FUTURES?

Futures require matched counterparties and are illiquid in smaller markets. Unihedge positions are always liquid — self-priced and instantly tradable.

DOES EARLY ENTRY MATTER?

Yes. Entering early means lower tax rates and cheaper access to valuable positions. As the market shifts and attention follows, those early spots become prime areas others will want to buy into.

It’s like buying into a neighborhood before it becomes popular — in Unihedge, being early isn’t just timing, it’s how you capture value before the crowd arrives.

HOW IS TAX CALCULATED?

The RHTAX is determined once, at the moment of purchase. It depends on your declared buyout price and how soon the position expires.

The shorter the time to expiry, the higher the rate. The rate roughly follows 1/√t, where t is the time until expiry (in days).

Example: Alice declares a buyout price of $100. Her tax depends on how far ahead her position is:

• 6 hours before expiry → 50% rate → $50 tax
• 24 hours before expiry → 25% rate → $25 tax
• 4 days before expiry → 12.5% rate → $12.50 tax
• 16 days before expiry → 6.25% rate → $6.25 tax

The tax is paid once, at purchase — not continuously.

WHERE DOES THE TAX GO?

Every RHTAX payment within a market contributes to that market’s reward pool. Each market (for example, ETH/USD or BTC/USDT) maintains its own independent pool.

At each settlement, the market determines a final price. The position whose defined price range covers that outcome receives the released reward share from the pool.

HOW DOES THE FLYWHEEL WORK?

Only about 10% of the market’s pool is distributed at each settlement. The remaining 90% carries over, gradually compounding together with new RHTAX payments.

This creates a self-sustaining “flywheel” of liquidity and rewards — early activity grows the pool, and later trades benefit from deeper, more stable incentives. Instead of one-time jackpots, Unihedge rewards continuous insight — keeping participation steady and the market fair over time.