FutureSwap – a new DEX derivatives platform – has just launched on Ethereum mainnet.

The highly anticipated product offers traders the ability to trade with up to 20x leverage and no slippage on any Ethereum-based asset, first and foremost starting with an ETHDAI trading pair.

Outside of margin trading, FutureSwap offers liquidity incentives for lending – operating similarly to Uniswap in which users must provide an equal amount of ETH and the target asset to the pool. Paired with a native token – FST-  FutureSwap adds an interesting incentive mechanism for using the platform. The project is currently undergoing an audit form OpenZeppelin and is offering a whopping 100% APY for providing liquidity to the underlying capital pools at the time of writing.

Our more frequent readers may recall Lasse Clausen – founding parter of 1kx – sharing his excitement for FutureSwap in our exclusive interview. It appears that his excitement has not faltered since then!

With that, let’s dive into what you should know about the new kid on the block.

How it Works

FutureSwap trading is permissionless and predicated around borrowing capital from liquidity providers. For each pair, there is an Asset and a Stable token.

“Let’s use the example of ETH/DAI pair. The trader selects LONG for their position, which means the user is borrowing the ETH (asset). If the user selects SHORT this means they are borrowing DAI (stable).”

Trading pairs leverage an Automated Market Maker rather than an order book – similar to how Uniswap works. This design enables liquidity providers to balance pools using a bonding curve based on Chainlink price oracles.

FutureSwap uses a Dynamic Funding Rate to balance out the amount of long and short volumes on the platform. In essence, a trading fee is regularly adjusted relative to how many traders are going long vs short. If everyone is taking out a long position, the fee to do so will become more costly and be rewarded to those providing ETH (the LONG asset).

“The Dynamic Funding Rate maintains the balance between long and short volumes by having the more in demand-side pay the less in demand-side a time fee. We envision this being arbitraged to maintain a relative balance between longs and shorts. If one side is paying the other a higher fee than on other platforms then there is a profitable opportunity for arbitragers.”

Adding new trading pairs to the platform is sought to be permissionless using an on-chain governance platform. This is where FST comes into play.

Enter FutureSwap Tokens (FST)

Here are a few of the key aspects of FutureSwap’s native token to keep in mind. FST is:

  • Only earned by using the platform relative to weekly volumes.
  • Distributed in batches of 61,000 FST each week.
  • Used to give traders up to a 30% discount on trading fees.
  • Non-transferrable and only be claimed by the address which earned the tokens.
  • Used to vote on governance proposals.

All in all, this design is quite unique as it mitigates secondary market speculation which can invite malicious activity. With this, it’s interesting to consider how governance by top users will play out, especially if it is capital intensive to earn tokens.

For now, we’ll be keeping a close eye on the “Governance” part of the platform which will handle any and all proposals.

The Bigger Picture

The launch of FutureSwap comes just hours after dYdX launched is 10x perpetual futures on BTCUSDC trading. While dYdX is gearing up for ETH-USDC perpetual support, the launch of FutureSwap providers with a taste of what 20x leverage feels like.

Across the board, we’re starting to witness more opportunities for users to leverage the most popular cryptocurrencies in a permissionless fashion. Perhaps what’s more unique is that FutureSwap trading does not restrict US traders, perhaps offering a unique advantage over dYdX.

In the coming months, we fully expect FutureSwap to integrate a suite of top Ethereum-based assets, ultimately building out a list of trading pairs on virtually all of the top liquidity pools on Uniswap.

To take advantage of attractive lending rates and 20x leverage on ETH-USD, get started today.

To stay up on all things FutureSwap, follow them on Twitter here.