Introducing Y2K Finance’s new product Wildfire: Lookback Futures.

Introducing Y2K Finance's Wildfire: Lookback Futures.

In today’s DeFi, the derivatives we have are similar to products in TradFi, such as various perpetual contracts and options, and these assets are often “pegged”, so we need more complex derivatives. Y2K Finance recently released a white paper on Wildfire, introducing a new financial derivative: Lookback Futures. Cryptocurrency researcher Wajahat Mughal tweeted to introduce it.

Lookback Futures is a contract traded on the order book with a unique pricing mechanism that essentially allows users to benefit from the lowest value of an asset during the contract period, in a new way to capture the value of a large number of underlying assets. These contracts will be traded within a specific range, limiting the minimum and maximum prices, allowing for more leverage and lower collateral, and without clearing, which can improve capital efficiency. By adopting an order book rather than an AMM model, these futures are easy to buy and sell, with transparency, cheaper fees, and better pricing models. These will be driven by a matching engine that is responsible for processing and executing orders.

The specific form of the product is still to be observed, but it is hoped that it will allow us to leverage exposure to whether underlying assets will trade within a specific price range. With time-based components, options will be very diverse. Like Earthquake, I believe there will be products with various risk indicators, and some products will have higher returns. With such a unique design, it will be interesting to see how sellers charge high premiums.