❓FAQ

What is Contango?

Contango is a unique decentralized market offering cPerps (Contango perps). Contango builds perps by automating a looping strategy, also known as recursive borrowing and lending. This is achieved using spot and money markets. Contango automates looping and provides a sleek trading UI that welcomes traders, loopers, farmers and allows them to trade with leverage on top of a professional interface with detailed indicators and simple automation tools.

Wen token?

Contango has no token. Beware of scams. Find more information on Tokenomics.

Do I need to deposit to trade?

No. Normally, when you lever up on money markets you need to borrow, swap, lend all in one transaction, and for that you need a smart account (like on Defi Saver or Instadapp). Contango hides this abstraction under the hood since its interface is mainly geared towards trading. This is great for users, as they don’t need to go through additional clicks to create and fund a smart account. On Contango you connect your wallet and can start trading right away.

What pairs can be listed on Contango?

The available pairs of cPerps currently offered on Contango are determined by the number of assets available on the underlying money market. Exceptions can arise when the assets used for a specif pair are available in isolation mode and/or can't be used as collateral on the underlying money market. Contango plans to integrate different variable money markets across multiple chains to expand its pair offering as much as possible.

How is the implied funding rate (APY) of a position computed on Contango?

The variable funding rate of cPerps is determined by the difference between the cashflow on the lending and borrowing legs of a position, which you normally see referenced as borrow APY and supply APY on the money market. That’s why it’s also called APY on the Contango UI. Read more on Key features.

What is the difference between ROE and APY and when should I toggle between them?

Both ROE and APY are useful indicators to estimate your profits and costs on a given position. You can always toggle between them in the app (when opening a position, in the Advance Trade Selection tool and in the Open Positions list). At a high level:

• APY (annual percentage yield) is determined by the interest rate difference in notional terms (calculated as a percentage of the notional value of the position)

• ROE (return on equity) is the same concept but computed on your initial equity (margin).

The APY is determined by the difference between the lending profits and the borrowing cost of a position, which you normally see referenced as borrow APY and supply APY on money markets. That’s why it’s also called APY on the Contango UI. The APY is thus the implied funding rate of your position, but its sign is inverted compared to funding rates on other perp venues. It's a useful metric to monitor when trading non-correlated pairs (e.g. ETH/USDC). Please note that the APY varies with leverage: the higher the leverage, the worst the APY (as more money has to be borrowed). On a side note, Contango has the cheapest and most stable funding in the space (source).

On the other hand, ROE is computed on your initial margin and thus offers an insight into the estimated returns you can have on your initial capital. It becomes a useful metric to monitor when doing correlated asset loops (e.g. wstETH/ETH or USDC.e/USDC), as you're not betting on the underlying asset increasing in value, you're just "farming" an interest rate spread. Similarly to the APY, the ROE varies with leverage.

What is the base currency on Contango?

On Contango you don’t have a USD-denominated account like other perp venues. Contango allows you to trade pairs using both the quote or the base currency. For instance, you can trade ETH/USDC by posting either USDC or ETH as margin. When closing a position you can also select if you want to receive the quote or the base currency to your wallet. When a TP/SL is executed you receive the quote currency only.

Why are funding rates cheaper and less volatile than competitors?

By design the funding rate on Contango comes from the borrowing and lending rates of the underlying money markets, which tend to be cheaper and less volatile than standard funding rates on other perp trading venues. Contango’s rates are on average 5x less volatile than Binance. More details can be found here.

Why is it cheaper to use Contango instead of other looping products?

Contango has 0 trading fees. It also uses free flash loans most of the time when building positions. And, cherry on top, it uses Mean Finance's DSK when performing swaps to build a position so you always get the best price across DeFi.

What is considered a safe value for leverage?

Selecting a value for leverage is ultimately a personal choice, which relies on your risk tolerance. Correlated pairs like wstETH/ETH or DAI/USDC have less price risk than non-correlated pairs like ETH/USDC, but depeg events can always occur so never open at max leverage unless you have a clear understanding of the implied risks. Contango provides a liquidation buffer indicator to help you gauge by how much price should drop for your position to get liquidated.

How’s the mark price computed?

Price shown in the opening ticket or in the open positions list is the price of whatever oracle the underlying money market uses to value that pair. Therefore this is the most accurate measure of how to compute healthiness and liquidation price of a position. This price is what is used for liquidations, which are indeed performed by the underlying money markets.

It is worth noticing that there are 2 types of oracle feeds that could be used by money markets:

a) exchange rate feed: reports the rate at which you can exchange, for instance, wstETH/stETH on the mainnet wstETH contract, so it's not affected by market forces trading on venues like Balancer, Uniswap, etc.

b) market price feed: reports at the current price at which, for instance, wstETH could be traded on the spot markets, regardless of the chain.

It's up to each money market to do the risk analysis on which feed they wanna use. For instance, for wstETH/ETH, Aave and Spark use the exchange rate feed, while MorphoBlue and Exactly use the market rate feed.

Why is the mark price different from the price shown in the charts?

In order to plot charts Contango picks the chain where Chainlink has both the lowest heartbeat and the lowest deviation, so as to make the chart as responsive as possible. This means that the chart is indicative and it’s not specific to the money market you’ve selected. Prices on charts should be seen as mid-market prices, for reference purposes.

How’s market impact computed?

The market impact is a comparison between the oracle price, aka mark price, and what Contango gets from the best spot market at the time of the trade.

How’s market impact on the rates computed?

With every trade the prevailing interest rates change due to the lending and borrowing activity that happens as a result. The market impact on rates is computed by looking at your trade size and checking by how much it moves the rates on the underlying market. To our knowledge, this metric is not even shown on the underlying money markets, but it’s particularly useful especially if you’re trading with size and you don’t want to move the rates against your trade.

Why is leverage sometimes lower on some markets compared to competitors’ products?

Contango adds around an extra 2.5% liquidation buffer on markets that don't differentiate between max loan-to-value (LTV) and liquidation threshold. This is meant to spare users from nasty surprises. This is also why the max leverage on some markets (e.g. on MorphoBlue) can be lower in Contango than on competitors’ products. For instance, instead of 13.8x on Contango, you could lever up to 18x on stETH/ETH on other competitors’ products, but you’ll be right on the edge of liquidation.

Can I open 2 positions on the same pair and market, and on the same direction?

Yes, you need to click the “force open” checkbox when you open the second position.

What is the 'dust' button on the UI?

Dust originates because when you close a position and chose to get the money in base currency (quote currency for shorts), due to the fact that Contango needs to sell base to pay the debt, but can't know exactly how much it needs to be sold, it sells a bit more, and the remainder goes to the user's account in the vault. We're fine-tuning that % to be as little as possible, but this won't go away entirely. If you got questions about this, let us know.

Is there a liquidation penalty?

Money market might have different liquidation penalties. The liquidation penalty is a fee paid on the price of assets of the collateral when liquidators purchase it as part of the liquidation process. Below you can find more information on the liquidation process of each money market:

Aave v3 | Aave v2 | Compound v2 | Spark | Radiant | Agave | Sonne | Lodestar | Moonwell | Exactly | Granary | Morpho

I’m having issues with Metamaks and Rabby

Contango works with most web3 wallets. If you’re having conflict issues with Metamask and Rabby and you’d like to use the latter, what you can try is the following: open the contango app, open console by pressing F12 on Windows or Cmd+Shift+C; go to the Application tab; on the left select Storage, now on the right panel you'll have a button called Clear site data. This will wipe out all the storage created by the app, including the wallet connection, so if you refresh, the app will show up with the "Connect wallet" button as if it's the first time you use it. Make sure you have Rabby enabled over Metamask and hit "Connect wallet", the pop-up will ask you if you want Metamask or Rabby, just select Rabby and voilà!