At present Facebook’s Cryptocurrency Libra is getting a lot of hype. The currency has been the most opposed product by regulators and lawmakers. Facebook hopes to launch the project by mid-2020 only if all regulatory concerns are addressed.
Meanwhile a recently launched cryptocurrency futures exchange, CoinFlex announced to launch physically-settled futures contracts for Libra,
As per the reports, the exchange is planning to start an initial futures opening (IFO) for Libra futures on Oct. 24. The futures will allow traders to bet on whether Libra will be live by Dec. 30, 2020.
How does it work ?
Basically, traders will bet on bet on the odds of Libra being in operation by the end of 2020. However, based on short or long positions, traders will either receive Libra tokens or nothing at all by the date. This means, if Libra is not launched within December next year, traders shall lose their entire initial investment.
As per the discussions with investors and traders, the initial price of Libra futures will be set at 30 cents.
CoinFLEX CEO Mark Lamb said,
It equates to a roughly 30% chance that Libra will be operational by the date. Also, it is intended to be a level that will attract divergent views to encourage trading. He further added, the political backlash has been brutal, and it’s anyone’s guess if Facebook will get this over the line.
Further, Within 30 minutes of the offering, investors who didn’t take part in the IFO can trade the contract at prices that better reflect their assessment of Libra’s progress.
For instance, if an investor that ascribes 80% chance to Libra being operational before the contract expires, will pay the equivalent of 80% of a Libra and, if correct, you will earn a Libra token when the contract ends. If wrong, he will receive nothing and will not get his money back.
Lamb said that, For both long and short trades, gains will be set to a limit at $1.1 per Libra to account for changes in the value of the currencies backing the stablecoin.
However, this is not CoinFLEX’s first IFO. Previously, in the month of July, the Seychelles-based exchange launched an IFO for blockchain interoperability project Polkadot’s DOT tokens. Moreover, CoinFLEX also offers physically-settled futures for bitcoin (BTC), bitcoin cash (BCH) and ether (ETH).