Contango brings cPerps to Polygon PoS and Ethereum, reaching $2.4B liquidity
London, UK, October 25th, 2023, Chainwire
Contango, a unique decentralized market that builds perps on top of money markets, has launched on Polygon PoS and Ethereum mainnet today, expanding its liquidity to a staggering $2.4B.
Its unique perpetual instruments are called cPerps (Contango perps) and are built without an order book or liquidity pools.
At a high level, long and short positions are synthesized by creating leveraged exposure on spot and money markets. More precisely, Contango builds perps by automating a looping strategy. Looping is the DeFi-native way of leveraging on-chain and became popular when users started borrowing and lending recursively on MakerDAO and Compound to build a leveraged exposure to a certain asset.
Currently, Contango employs Aave as the underlying money market for cPerps, which, at the time of writing, totals $2.4B in liquidity across Polygon PoS, Arbitrum, Optimism and Ethereum (source).
“Launching cPerps on Polygon PoS and Ethereum marks another step forward for Contango – explains Kamel Aouane, co-founder of Contango – as traders can now benefit from greater liquidity on L1, as well as cheap fees and fast transactions on L2s.”
Besides traders, cPerps have a particularly interesting use case for loopers and whales looking to access on-chain leverage. Aouane explains: “If you’re preparing for the bull market and want to build up a large low-leverage position over the long-term, you need two things: deep liquidity and funding rates with low volatility. Contango offers you both, hiding away all the complexity of looping behind a simple trading interface.”
cPerps funding rates are determined by Aave’s lending and borrowing rates, and these are notoriously less volatile than funding fees of derivative exchanges. An internal study by the Contango team confirms that over the past 8 months these rates have been less volatile than Binance, the largest centralized exchange, and dYdX, the leading decentralized derivatives protocol (source).
Aouane also emphasized the scalability of the design behind Contango: “In just three weeks we have expanded horizontally, launching on four major chains. Now we plan to expand vertically, by integrating more markets within the same chains.”
After Aave, the team is targeting an integration with Compound, Spark, MakerDAO, and Morpho. “The integration with Morpho Blue is particularly interesting – says Aouane – as their new design with custom loan-to-values could allow for higher leverage on Contango”.
Traders can already try cPerps on Polygon PoS and all the major chains at: https://app.contango.xyz/
About Contango
Contango builds perps through looping on money markets. Deep liquidity is sourced on money markets, where interest rates produce less volatile funding rates. An intuitive trading interface welcomes advanced traders ready to trade with size, seasoned loopers looking for better monitoring tools, and degens eager to farm rewards on money markets.