Futures Contract

From CryptoCurrency Wiki

Basics

"A futures contract is a way for:

  1. A buyer to acquire an asset on a particular date in the future
  2. A seller to sell it at whatever price of the asset is at that date in the future

You can also have futures for one type of asset, but settled in another. For example, you might have ETH futures that settle in USD instead of ETH.

A forwards contract is similar to a futures contract except that the forward contracts are customised based on certain characteristics such as:

  1. The number of units
  2. An acceptable grade/parameters
  3. The place where assets are to be delivered on settlement
  4. The time interval to deliver the goods at expiry

In the realm of crypto, the settlement part of this equation is highly efficient since it's just computers pointing and transferring to wallets. There are no physical settlement risks.

On December 10, 2017, CBOE Futures Exchange launched the first ever Bitcoin futures market. There's currently no on-chain futures market available in DeFi. Some novel forward/futures that exist or would be neat if they existed:

  1. Electricity futures for crypto mining as they help miners hedge risk
  2. Lockdrop futures for trading an asset before it's available and settlement happens when the asset is available. You could probably do the same for illiquid ICOs if there was a market large enough

Main projects

As per my current understand, the main DeFi players operating in the futures field are as follows:

  • Futureswap - AMM-based futures with up to 20x leverage on-chain. It looks like they’re in alpha stage at the moment and that Ric Burton is shilling them 24x7. To me this seems like the next generation of degen like on-chain speculation.
  • MCDEX- futures exchange with no KYC. This looks like a fairly polished product that is live and in production, doesn’t get much CT hype though. Maybe the builders are too busy shipping.