The method of organizing a decentralized BTC futures contract on the Fusion blockchain.
A futures contract is an agreement on a specific asset that will be transferred at the end of the futures period. Any commodity (oil, grain, cryptocurrency(bitcoin), gold, etc.) can act as an asset.
Futures are deliverable and settlement.
Delivery futures assume that on the expiration date of the contract the buyer must buy and the seller must sell the underlying asset in the amount specified in the contract. As an example of supply futures can be cited commodity contracts for oil or wheat prepaid now, but the delivery of which will happen, for example, in three months.
Settlement futures initially do not involve the delivery of the underlying asset, but only a monetary calculation in the amount of the difference between the contract price, for example (for oil or bitcoin) and the value of the asset at the date of the contract.
Futures contracts can be on a variety of assets — securities, stock indices, commodities (oil, metal, millet) and cryptocurrencies such as bitcoin.
Today, in particular, on bitcoin there are settlement futures transactions on such well-known commodity exchanges as:
• Chicago Mercantile exchange (CME)
• Chicago Board options exchange Chicago Board Options Exchange CBOE
• crypto currency exchanges: OKCoin, BitMEX, Bitstamp, GDAX, itBit and Kraken.
However, the Bakkt platform announced that on September 23, 2019, it will launch the sale of deliverable futures for physical bitcoin.
A new mechanism for implementing decentralized bitcoin futures is the Fusion blockchain.
The presented method has an implementation of automatic shipment of Bitcoin on the expiration date. Along with this, this method allows you to create a decentralized futures contract for future deliveries of raw materials, such as oil, metals, bitcoin, for example, outside specialized exchange platforms.
At the same time, the created futures contract has automation elements that will ensure the automatic fulfillment of the conditions for the supply of raw materials.
In October 2015, the European court of Justice decided to exempt operations with bitcoin from VAT, that is, in this way it automatically classified bitcoin as a commodity, because bitcoin is sold for money and can be physically supplied as a commodity. And it’s getting interesting.
For example, the shipment of Bitcoin goods will occur on the blockchain network. This allows you to automate the execution of futures contracts, such as accounting for contract payment, shipment of goods, delivery of goods occurs on the blockchain network and records all operations.
The new mechanism will remove the risk of not delivering a consignment of goods (Bitcoin) after receiving an advance payment and concluding a futures contract. It remains only to pay the contract in full at the appointed time and receive the goods.
You can buy a futures contract, such as Bitcoin, for example in a crypto wallet. The Fusion blockchain architecture allows this.
This removes exchange restrictions and formalities. Bitcoin futures contracts will be available to a wide range of buyers.
Futures contracts created on the Fusion blockchain:
· Does not require registration on the commodity exchange
· The transaction takes place in the crypto wallet at the buyer
· The reserved Bitcoin, the buyer immediately sees
· Legality in the us market, trading in bitcoin futures contracts is authorized by the US Commodity Futures Trading Commission
ORGANIZING DECENTRALIZED FUTURES ON THE ARCHITECTURE OF THE BLOCKCHAIN FUSION
For the organization of “futures contracts” between the supplier of goods and the buyer, a third party, “contractor”is created.
In the presented scheme, the “contractor” may be a Bank, custodian or exchange.
The contractor will pay for the entire decentralized futures transaction.
The contractor receives an advance payment for the creation of a decentralized futures contract.
The contractor, if for example bitcoin suddenly begins to fall in price below the value of the collateral, will sell the contract at market value and compensate its costs.
To carry out the interaction between the buyer of a decentralized futures contract, the “customer” and the “contractor” there is a “pre-order”, which is actually an order
“Contractor”, creates a preliminary order, Quantum Swap order for a futures transaction. In the figure there is a variant of how it can look in the interface.
This is actually a Quantum Swap offer to supply a futures contract from a “contractor”.
Decentralized futures contract comprises three parts:
1 part, suppliers of goods or “contractors” offer their futures contracts through Quantum Swap “preliminary orders” and send to the crypto-wallet to the potential buyer of Open Takes, or to the common trading platform: Swap Market
If the buyer accepts the offer of a futures transaction, then make Swap pays for the “pre-order”.
Part 2, the “contractor” receives payment of this “advance purchase order” and uses the proceeds as collateral to arrange for the purchase of the goods and the financing of the futures transaction.
3 part, the “contractor” creates through the “interface of creating a futures Quantum Swap contract a futures transaction for the supply, charges for example with physical bitcoins in accordance with the terms of the “pre-order” and sends to the crypto wallet to the customer.
Further, this delivery futures Quantum Swap contract is in a state of waiting for payment, for example, within 6 months in accordance with the terms of the “pre-order”. And after the timely payment of the futures, the goods (bitcoin) enters the balance of the “customer”.
The figure shows the scheme of interaction between “contractor” and “customer”.
(5) the “Contractor” may be a Bank, custodian or exchange that places its “pre-order” for the supply of goods on the trading floor (5) for example, on the Fusion Swap Market platform. (6) Potential buyers select and pay for the futures contract they need, which is presented in the form of a “pre-order” for the delivery futures. (5) “Contractor” receives a signal pay for their “preliminary application” and creates a Quantum deliverable Swap futures (7). (8) “Contractor” sends Quantum deliverable Swap futures “to the customer».
In the present scheme with the option of financing the futures transactions as a fiduciary of the banks and crypto investors.
(1) a Bank that has excess liquidity sends dollars to the custodian operator Stablecoins USD. (2) Custodian sends Stablecoins USD which is 1:1 equivalent US $. (3) the Bank, industrial enterprise or private crypto investor, through a smart contract, sends a signal (3) to the credit pool of the custodian (4) that the amount of Stablecoins USD is blocked in the crypto wallet of the investor to provide kostodian with the opportunity to use from the natural us dollars stored on his Deposit for credit financing of futures transactions. (3) If the custodian accepts Stablecoins USD to Finance the credit transaction, the crypto investor sends Stablecoins USD through the smart contract.
I believe that the interest rate on lending for futures transactions will be more beneficial for the banking sector.
Blockchain Fusion allows you to make futures contracts for the delivery of bitcoins affordable for virtually all people.
The advantage of the Fusion futures contract is automation, decentralization and the removal of bureaucratic barriers.
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