We’re thrilled to announce another masterpiece incubated by Alpha Incubate: “Contango”, a decentralized exchange that brings expirable futures to DeFi without order books or liquidity pools.
For the first time ever in DeFi, you can now access linear and inverse contracts with expiry dates and leverage. You no longer have to bear the burden of the unpredictable funding rates as the final price is paid upfront, giving you full control of your cost!
With the maturity date, the close price can be pre-calculated allowing traders to estimate profits with certainty thus eliminating risks associated with index price manipulation.
Contango is a step ahead in the game of crypto futures by inventing the best procedure for you to trade futures in the most optimal way. The protocol utilizes deep liquidity pools on underlying DeFi protocols rather than having its own liquidity pools to ensure minimal price impact for any trade size. Not only that, every position that is opened will be tokenized as an NFT, enabling other projects to easily build on top of Contango.
Expirable futures are for you, especially if you’re a long-term investor. Don’t let funding fees bite into your profits!
Discover what you can do with Contango here
At Alpha Incubate, we seek high-quality projects that aim to solve large and real problems with the long-term goal of making a difference in the Web3 industry. Timing is another important consideration when looking at the project. The problem must be tackled and solved at the right time when the market in the current Web3 landscape is ready, whether it's the demand, tech infrastructure, community, etc.
Since the crypto futures market continues to grow exponentially, we believe this is the right time to bring the already existing concept of futures contracts in CeFi to DeFi and expand the Web3 use cases. As a builder’s DAO that strives to innovate at the forefront of Web3, this is definitely an opportunity we cannot miss! Hence, we are very delighted to incubate Contango and be a part of their journey to bring this innovation to DeFi users.
We have been working closely with the Contango team since summer of 2021. The team has demonstrated extensive knowledge in DeFi, particularly an understanding of the futures market from the inside out. This makes us confident that they are well-equipped to succeed and overcome the challenges that they will face from being the first mover to bring expirable futures to DeFi.
Alpha Incubate x Contango
As always, ALPHA stakers will be able to claim benefits from the addition of Contango to our ecosystem by obtaining tokens from the protocol through staking on Alpha Tokenomics. Stay tuned for more details on this!
Join our Discord here to stay updated on the activities that you can engage in our incubated projects through Alpha Contribute.
How it works
Contango allows traders to open positions through atomic lending and borrowing at a fixed rate that occurs on other DeFi protocols. The protocol integrates with Yield and Notional, fixed rate markets that introduced the concept of fyTokens (fixed-yield tokens, a fungible token similar to a zero-coupon bond, e.g. fyDAI, fyETH,..) to make all this magic happen!
To begin, traders must post some collateral depending on the desired leverage to open a position. The protocol will borrow token A on the fixed-rate market, swap for token B on the spot market (e.g., Uniswap), then lend token B back on the fixed-rate market to synthesize a long/short position. As a result, traders don't have to worry about anything as the protocol automates it all under the hood, replicating the cash flow of their futures positions via fixed-rate markets.The user experience will be just like trading on major CeFi exchanges.
Beside the above innovation, what distinguishes Contango from other futures exchanges is that it utilizes the collateral posted by traders to give better capital efficiency. For example, on the long ETH/DAI position where traders post DAI as collateral, less DAI is borrowed from the fixed rate market to swap for ETH on the spot market (collateral DAI + borrowed DAI). The higher the collateral, the lower the price to open the long position due to less debt.
Discover more about how Contango works here
Alpha Incubate was introduced to ultimately grow the Alpha Universe and bring more value accrual to ALPHA stakers by distributing their tokens to the stakers who support our ecosystem. Along with the Alpha Network, we offer every incubated project with an effective business plan from all dynamic angles, whether it's the product-market fit, tech advice, or even fund-raising strategies. For any teams interested in applying for Alpha Incubate Program check out our application process here.
About Alpha Venture DAO (Previously Alpha Finance Lab)
A Builders’ DAO. We explore and innovate at the fringes of Web3 and drive significant value to Web3 users, and ultimately, alpha returns to the Alpha community.