By Connor Hughes
Fantom is excited to announce that we’ve been listed on Delta Exchange for BTC-settled futures trading with up to 5x leverage. Delta is a rapidly growing crypto-derivatives exchange with a team sourced from some of the biggest names in global banking. With the continued growth of Delta’s user base worldwide that shows no signs of slowing, we’re confident the listing will bring benefit to both ecosystems.
While we’ve worked hard to ensure FTM is available on a number of the world’s most accessible and respected cryptocurrency exchanges for traditional spot trading, the addition of futures trading from Delta is a great milestone for us – a complete market with increased liquidity for the FTM token reduces operational risks for potential integrators of Fantom’s technology.
Futures are financial derivatives contracts that allow you to commit to buying/selling an asset – in this case, the FTM token – at a specified future date and price. Users can open both long and short positions, as well as using leverage – none of which are available when trading in the standard markets (spot trading).
Let’s say you commit to buying 1,000 units of a given token for $10 per token in 5 days for a total of $10,000 using futures contracts. The price of the token rises to $20 in the next 5 days. You can then buy the asset for $10 using your futures contract and immediately sell it for $20 (its current price) on the open market – pocketing the difference of $10 per token, for a total profit of $10,000. If you commit to buying an asset and the price falls, you would be left with a loss – you’ve committed to buying for a price higher than its value on the open market.
So far, this isn’t much different from trading the underlying asset – in the above example, you could just buy 1,000 tokens for $10,000 and decide to sell them in 5 days. With futures trading, though, you can use leverage to increase your exposure to an asset’s price. Let’s say I take the same $10,000; with 5x leverage, I’m now able to commit to buying 5,000 tokens for $50,000. If the price of the token rises to $20 in the next 5 days as in the above example, my profit is $50,000 rather than $10,000 from just buying the asset directly.
If the price of the token falls, however, your losses would also be magnified by a factor of 5x. You have $10,000 allocated to the trade, so if the price fell by 20% ($10,000 unrealized losses on your $50,000 position) then your entire position would be liquidated – the initial allocation of $10,000 would be lost regardless of what happened to the price after the liquidation.
If you believe the price of the asset will fall, on the other hand, you can commit to selling it for $10 instead. This time, if the price rises by 20% while using 5x leverage then your position would be liquidated, while a 20% drop in price would result in a $10,000 profit. The maximum profit possible in this scenario would be $50,000 – only achieved if the asset’s price were to fall to $0.
For more on how futures work and how to trade on Delta, please see their guide to the basics of futures trading: https://delta.exchange/margin-trading-and-futures-trading-basics/
Trading futures involves the risk of loss. Please consider carefully whether futures are appropriate to your financial situation. Further, please ensure you have educated yourself to an appropriate standard on futures markets and Delta’s exchange interface.
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