Explaining Futures Contracts in Contango: Low and Predictable Costs

Understanding Contango in Futures Contracts: Predictable and Low Costs

Encryption researcher hangry tweeted to introduce the main features, advantages, and specific usage methods of the futures agreement Contango, and compared the actual trading cost of Contango with GMX, Gains, Unidex, and other agreements.

Contango is a decentralized exchange that offers futures contracts without order books or liquidity pools, similar to perpetual futures offered by protocols such as GMX and Gains, with the main difference being the expiration date. Contango has no funding rate, lower fees, and all costs are known in advance, making it suitable for hedging positions or arbitrage between Contango and other exchanges.

Contango has been launched and audited, with a new user experience, more leverage, and trading pairs, and is much cheaper compared to other perps. Trading on Contango requires a 0.15% trading fee and the basis rate, which is the difference between the spot price and the contract price. The basis rate is much lower than the funding rate and is known in advance.

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Using 1 ETH long as a benchmark, Contango charges $2.73 in fees and a basis rate of 0.000092% per hour. GMX costs around $4 and charges a rate of 0.0055% per hour, while Gains charges a funding rate of 0.0023% per hour and a fee of $2.9. It is better than GMX, but far from Contango; Unidex charges a trading fee of $1.8, which is better than Contango, but charges a rate of 0.001852% per hour, still 20 times higher than Contango. The funding rate is highly unstable, but Contango is usually better than other perpetual exchanges.

Reference: https://twitter.com/kindahangry/status/1661749156413833224

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