Contango, a decentralized derivatives exchange, saw its total value locked (TVL) bounce back after a two-month downtrend to reach a new record high of $39.9 million on Friday, September 13. It has managed to beat the previous record of $39.5 million set at the end of July.
The derivatives platform offers on-chain perpetual contracts. In addition, it allows users to leverage anything on-chain, including staking or restaking positions and farm points.
Thanks to the recent increase, Contango has returned to the top 15 derivatives projects in decentralized finance (DeFi), surpassing Astherus and Synthetix V3.
Contango supports 10 blockchain networks, including Ethereum, Arbitrum, OP, Base, Avalanche, and BSC. With over $20 million in TVL, Ethereum accounts for more than half of the locked liquidity.
The weekly trading volume of its derivatives has been correcting after reaching a record high of $277 million at the end of July.
Weekly active users peaked at the end of July as well, nearing the 1,000 mark. In mid-September, approximately 600 wallets per week interacted with the platform.
Contango uses a unique approach to reduce funding rates and minimal price impact. It builds positions on top of spot and money markets (like Aave and Compound) by automating looping strategies via flash loans. Looping is a form of repetitive supplying and borrowing of an asset on a lending platform that rewards lenders and borrowers with its own token.
When a trader goes long on ETH/DAI by depositing DAI as margin, the protocol gets the remaining DAI from a flash loan, swaps all DAI for ETH on a decentralized exchange (DEX), and lends ETH on a money market to borrow DAI and repay the flash loan.
When closing the position, the protocol undoes the described process.
Contango offers up to 14x leverage for its on-chain perpetuals.
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