🔑Key features
$20B+ liquidity
cPerps are built on top of spot and money markets. By aggregating the +$7B liquidity of spot markets and tapping into the +$13B liquidity of money markets, cPerps offers traders a minimal price impact. See more details on How it works.
Funding rate vs APY
Conventions on perp exchanges indicate with funding rate the variable interest rate on the underlying debt. Funding rates are charged periodically, e.g. every 1 or 8 hours.
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. It can be positive or negative:
if it’s positive, it means the trader is receiving money to keep his position opened.
if it’s negative, it means the trader is paying money to keep his position opened.
In other words, Contango’s APY is equivalent to a funding rate, but its sign is inverted compared to funding rates on other perp venues.
The APY on Contango is accrued as PnL and settled when closing the position. Note that the APY varies with leverage, e.g. it can be positive at 2x, and negative at 4x. This is due to the fact that more money is borrowed with a higher leverage, resulting in a higher borrowing cost while the lending profits remain the same.
Also note that because of this architecture, the APY is less volatile than other perp trading venues. Early research we carried out shows that cPerps built on Aave are 3x less volatile than Binance and 20x less than dYdX.
Liquidations
Given the architecture of the protocol, all liquidations are carried out at the money market level, not on Contango.
Just like with some money markets where there is a distinction between max LTV ratios and liquidation thresholds, on Contango there’s a max leverage to open a position and a higher leverage threshold at which traders get liquidated.
Money market might have different liquidation penalty. 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.
Traders can easily monitor their positions' health by looking at their liquidation price and minimum margin.
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
Available pairs
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.
Up to 14x leverage
Leverage is determined by the loan-to-value ratio (meaning: how much you can borrow against your collateral) on the underlying money market.
Leverage is = 1/(1 - LTV ratio). If we take Aave’s parameters as a reference, we can see the amount of leverage that its standard LTV ratios can offer:
82.5% LTV is equivalent to 5.7x leverage (e.g. for ETH/DAI or ETH/USDC pairs)
90% LTV is equivalent to 10x leverage (e.g. for same-flavor pairs like stETH/ETH)
93% LTV is equivalent to 14.3x leverage (e.g. for stable pairs, like USDC/DAI or EUR/USDC)
Just like with money markets where there is a distinction between max LTV ratios and liquidation thresholds, on Contango there’s a max leverage to open a position and a higher leverage threshold at which traders get liquidated.
Automated orders
On Contango you can easily add automated orders like take profits and stop losses to your positions. Adding these type of orders incurs the same fees as opening, modifying or closing your position, plus a reward for keeper bots to execute them. See more details on Protocol Fees.
Quote and base currency as margin
Traders can post margin in the base or quote currency, depending on their trading needs. See more details on these two flows on How it works.
Multiple positions on the same pair and direction
Thanks to the construction of cPerps, traders can open multiple position on the same pair and direction at once.
For instance, you can have two ETH/DAI longs opened at the same time. Each position is independent from the other. Also, opening a short on ETH/DAI won't offset the longs.
All positions are tokenized as an NFT.
Modify size and leverage in one tx
The size and leverage of a position can be modified together, in the same transaction. See more details on the Tutorials page.
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