- cypher offers both pairs and indices for trading
- cypher offers up to 2x leverage on trading futures
- cypher supports cross collateralization of trading positions
Dated futures are contracts that bind a buyer and a seller to exchange an asset at a future point in time for a certain price. The change in profit and loss for each side of the contract moves with the underlying price the contract tracks - this is called marking the contract to market.
Here are the differences and similarities between dated futures and perpetual futures:
- The concept of funding rates do not exist in dated futures
- Instead of being able to indefinitely hold a perp futures position open, a dated futures position via cypher is (at least initially) financially settled at expiration
- In the event that a trader would like to keep a futures position open longer than the time the contract expires, they can ‘roll’ their position - i.e. close the existing position prior to expiration and open the same position on a later dated futures contract.
- Both contracts offer the option for margin
- Both contracts derive their price from the underlying price of an asset
Instead of quoting assets in USD, pair futures quote an asset relative to another asset. An example of this is the BTC/ETH pair. When a trader goes long BTC/ETH, they are betting that relative change in price of the underlying assets will make the fraction increase.
Example calculation: BTC trades at $30k (denominated in USD) and ETH trades at $1k (denominated in USD). The current pair ratio would be equal to 30. Assuming a trader was long 1 contract of BTC/ETH, there are three scenarios that would cause this fraction to increase.
- 1.The BTC/USD price stays constant while the ETH/USD price decreases
- 2.The BTC/USD price increases while the ETH/USD price stays constant (or increases less on a percentage basis)
- 3.The BTC/USD price decreases while the ETH/USD price decreases more
For a short position, the inverse of these scenarios benefit the trader; they believe that the USD denominated price ratio between the two assets will decrease.
An index is a basket of assets that track the performance of a sector in a market. The assets in an index are generally weighted by a metric (circulating market cap, volume, volatility, etc), which affects how much a price change in a single asset affects the overall price change of the index.
There is a minimum amount of contracts you can buy for each asset. The minimum sizes for each asset are defined below:
Here is the composition of the SOL&P index: