⭐Quanto Perpetual Contracts

Basics

Lamda.exch is developing a quanto futures contract (often known as a contract for difference or CFD in conventional markets). This type of contract does not require the user to hold either the token being traded or its underlying. It enables Lamda.exch to provide exposure to volatility of a multitude of assets while maintaining only one liquidity pool.

This is an easy to understand product that resembles other types of derivatives many traders are familiar with.

For example: with Lamda.exch, one can long our BTC futures contract (denominated in USD) using a future Monad Chain native token (lets imagine it is "MONAD") as collateral. Profit and loss is settled in MONAD. In the future we will explore using other wrapped assets as the margin currency.

This will provide organic demand for a future native token on the Monad chain.

A quanto is a type of derivative in which the underlying is denominated in one currency, but the instrument itself is settled in another currency at some rate. Such products are attractive for speculators and investors who wish to have exposure to a foreign asset, but without the corresponding exchange rate risk.

Inherent Risk of Quanto Contracts

Traders should understand the risks inherent with quanto contracts. Because directional movements of token prices are often correlated, the impact on the USD value of MONAD can be greater than expected in some cases.

In the case of the BTCUSD quanto contract, because the value of each BTCUSD contract is linked to the USD price of MONAD (for example $1 of movement on the BTCUSD contract will result in a gain or loss of MONAD), a correlated move in price (both MONAD and BTC declining) can have an outsized impact on P&L. Note that MONAD is intended as a stablecoin that attempts to maintain a peg with USD.

Leverage

Users can avail of leverage to increase the notational size of their position many times greater than their deposited capital. The amount of leverage offered will vary depending on the collateral used and the token that is being traded. Quanto contract leverage will likely be limited initially to 5x.

Pricing

Asset price is set using a proprietary system that polls relevant spot exchanges and averages their prices. Weights are assigned based on volume and history of each exchange and can be adjusted if necessary. These are always disclosed in the specifications for each contract, and can be queried with our API.

Fees

Users will be charged a fee to open and close a position (or to adjust the size of an existing position). Fees vary based on amount of leverage used. High volume traders receive automatic fee rebates based on volume history.

The fee for opening or closing a position with 10x or less leverage is 0.10%.