Futures Contract

A futures contract is a legal agreement to buy or sell an asset at a predetermined price and time in the future. Futures contracts are often used in traditional financial markets to hedge against price fluctuations or speculate on future prices.

In the crypto space, futures contracts are also available and can be traded on both centralized and decentralized exchanges. Futures contracts for cryptocurrencies work in a similar way as traditional futures contracts. The difference is that they are settled in cryptocurrency rather than a traditional currency.

One popular type of futures contract in the crypto space is the perpetual contract, which is similar to a traditional futures contract but without an expiration date. Perpetual contracts are designed to mimic the spot market with the use of funding rates to ensure that the contract price stays close to the underlying asset price.

Decentralized exchanges (DEXs) also offer futures contracts in crypto. These DEXs enable traders to trade directly from their crypto wallets without the need for a centralized intermediary. The advantage of trading futures contracts on a decentralized exchange is that it offers greater privacy and security due to the absence of a central point of control.

Overall, futures contracts in crypto are a popular way for traders to manage risk and speculate on future prices. With the increasing popularity of decentralized finance (DeFi) and decentralized exchanges, it's becoming easier for traders to access futures contracts on these platforms.

Also study