Q&A: What are crypto futures, why they matter, and the benefits they bring

cointelegraph.com:

In recent years, futures have started to play a pivotal role in the crypto markets. Yet if many of us were asked to explain what perpetual futures are, we'd break out into a cold sweat.

Andrew Weiner, VP of MEXC, is on hand to explain how crypto futures work, what they're used for, and provide some fascinating statistics about how large this market actually is.

1. Hello! First off… can you give us a basic definition of what crypto futures are?

So basically, a futures contract is an agreement to buy or sell a commodity, currency or another instrument at a predetermined price at a specified time in the future. 

Unlike the traditional spot market, the trades are not "settled" in a futures market instantly. Instead, two counterparties will trade a contract that defines the settlement at a future date.

2. How have the crypto futures markets evolved over the past four years?

In terms of the product, user experience requirements for future products are getting higher. For example, perpetual futures have become mainstream futures products — and their functions need to meet more user needs in terms of leverage multiples, pricing and position opening. However, liquidity is the indicator that futures users are most concerned about, and it's a crucial factor that trading platforms are competing on.

In the past three years, the trading scale of futures contracts has shown explosive growth. The annual trading volume of perpetual futures in 2021 reached $57 trillion — an increase of 358% compared with the trading volume of all derivatives in 2020. The trading volume of spots at that time was $49 trillion. Futures trading volume remained steady at $1 trillion in Q2 this year, surpassing spot trading.

3. Why are futures products necessary?

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