What is Contango?
Contango is a unique decentralized market offering expirables, contracts to buy or sell an asset at a set price and date in the future. Contango achieves that without order books or liquidity pools. When a trader opens a position, the protocol borrows on the fixed-rate market, swaps on the spot market, then lends back on the fixed-rate market. Contango offers physical delivery and a minimal price impact for larger trades.
Opening an expirable position on Contango
Choose an instrument and a side (long/short), pick an expiry date, define leverage and forget about the unpredictable costs of funding rates.
Contango borrows on the fixed-rate market, swaps on the spot market, and lends back on the fixed rate market to replicate the cash flow of an expirable position.
Contango doesn’t need its own liquidity pool. Instead, it takes advantage of the deep liquidity pools of underlying protocols to offer a minimal price impact for any trade size.
At expiry, Contango allows traders to have their position physically delivered or to settle it through cash (i.e. cash settlement).