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Less than a month following the arrival of Bitcoin (BTC) futures markets, a futures contract for Top 2 rival crypto Ethereum (ETH) has been created – but this time it’s been put on the Blockchain. Futereum, with symbol FUTR, will be tradeable on crypto exchanges as of early February according to its issuer the Futereum Foundation.
FUTR has already started selling aggressively, with FUTR buyers snapping up nearly 8,000 FUTR in the form of utility tokens as a result of strong interest by the ICO scene. The buying is also particularly strong as the market has been selling off this week and investors are looking to hedge their potential losses and amp up any potential gains when prices come back.
Expanding Derivatives Market For Digital Assets
In December, CBOE began selling futures contracts for Bitcoin on the Chicago Mercantile Exchange. A week later, on the day of the 9th anniversary of Satoshi Nakomoto’s White Paper release for Bitcoin, rival issuer CME issued its own futures product for Bitcoin aimed at institutional clients, representing 5 bitcoin per future vs. CBOE’s 1 bitcoin per future contract.
FUTR is not a securitised product offering, so it doesn’t trade on a national securities exchange, but functionally it works similarly to a futures contract. By utilising the Futereum smart contract, FUTR allows a crypto investor to “mine” FUTR with ETH, the way that ICOs are ordinarily marketed. The difference between FUTR and an everyday ICO begins and ends there, however.
“It’s a full fledged derivative,” said Daniel Oon, an advisor for the Futereum Foundation and founder of Nodex Capital, a Singapore-based cryptoasset investment fund. “FUTR is actually a derivative (at mechanism level), but can be the “answer” to many of ETH problems. It’s weird to view a derivative as a stablecoin, but it can actually work.”
How FUTR Uses Blockchain To Simulate Leverage
Once the ETH is received by the smart contract, a 15.3% portion is received by the FUTR issuer, with the rest of the crypto being held securely at the smart contract address. If all the FUTR tokens, comprising 6,730,000 in total, are issued before the end of 12 months following the issuance date, then on the last day of the 13th month FUTR holders have the option of swapping their FUTR tokens back with the ETH in the smart contract. The period is extended to 37 months if the tokens are not all issued within the first 12 months.
“FUTR is the best savings account since I can’t sell all my ETH right now,” commented Eric Obrien, a crypto investor, in the Futereum Telegram group.
Best Product For Market Selloff
What makes the product act exactly like a futures contract for ETH, despite being a utility token, is the employment of a Fibonacci-based algorithm that means that early-stage miners and miners of FUTR during periods where ETH falls a lot in price fare much better in the swap than those who mine the FUTR both late in the game and at a point when ETH is soaring higher. That’s because, just as for standard Proof-of-Work mining algorithms, less FUTR is issued as the number of FUTR in circulation increases.
Presently, investors can mine 114 FUTR per 1 ETH by going to the Futereum Foundation website and following the instructions there, which amount to copying the smart contract address, setting a minimum level of gas per transaction (60,000 gwei) and sending on their ETH. Immediately, FUTR are deposited wallet from which the ETH was sent.
The unique properties of FUTR make it the perfect crypto “hedge” for investors. Tuesday, as markets sold off across the board, FUTR was snapped up by ETH holders looking to get in on the diversified action of owning Ether and FUTR.
“Derivatives should hedge risk when it market crashes like its doing now or leverage as it’s going up,” explained Sam C., another big FUTR buyer, to the foundation’s Telegram group chat this morning. “It’s good I bought in and my losses will be minimized.”