Contango Exchange (external doc)
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Contango Exchange (external doc)
GETTING STARTED

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What is a futures contract?

*Use cases: hedging vs speculation
Types of contracts

Futures for dummies

A futures is a derivative contract to buy or sell an asset at a specific date and price in the future. It’s called a derivative because it derives its value from an underlying asset. A futures always has an expiration date at which the underlying asset has to be sold or bought, and a set price that is known upfront. At expiry, the buyer must purchase and the seller must sell the underlying asset at the set price, regardless of the current spot price. Also, at expiry, the futures price is the same as the spot. (source: Investopedia)
A futures contract has its own market with demand and supply.
If the price of the futures is higher than the spot price of the underlying asset, the market is in contango (that's us! 💃).
if the price of the futures is lower than the spot, then the market is in backwardation.

The history of futures in one minute

Futures are lit. They’re older than currencies. It seems it all started in 1750 BC with the Hammurabi Code which allowed ancient Babylonians to enter into contracts for future delivery of goods. Later the Japanese perfected the idea of a futures exchange with the Dojima Rice Exchange, born in 1730. And in the modern era it was the Chicago Mercantile Exchange that brought futures into the mainstream, with futures trading on foreign currencies. Flash forward to today’s crypto world: Bitmex, FTX and other major exchanges all offer futures trading on many pairs.

So what’s different about Contango Exchange?

Well, a few things.
Contango is permissionless, decentralized and composable. It’s the first DEX to offer expirable futures in DeFi without liquidity pools.
Contango prices futures replicating their cash flows using interest rates of quote and base currencies traded on fixed-rate lending and borrowing protocols. (see XYZ section).
Contango uses the trader’s collateral to provide her with better pricing (see XYZ section).
Contango offers physical delivery (update)

Navigate to the sub-sections to learn more:
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*Use cases: hedging vs speculation
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Types of contracts
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