I reached out to the Contango team after using the platform, to get a better understanding of how and why they made Contango.

1. Why is the protocol named contango?

“Contango” is financial slang to describe a situation when the futures price of an asset trades above its spot price. A “contango” situation usually occurs when an asset’s price is expected to rise over time. Aka, bullish!

2. What was the background for using existing liquidity pools on different rollups as the basis for leverage versus other architectures?

This design (lending and borrowing recursively) is the native way of leveraging on chain and has been validated through the years as users kept looping on money markets to either gain a bigger exposure, profit from the net APY of rates, or farm rewards. We also used this design for our v1 with dated futures, where we used fixed-rate markets (like Yield Protocol) instead of variable-rate ones (like Aave).

3. Will there ever be organic contango liquidity for leverage?

4. What is your thought on the perp landscape in defi — is it oversaturated? Is there a lot of room for improvement?

We wrote a detailed comparison with other perps here, maybe it’ll give you some more background: https://medium.com/contango-xyz/a-comparison-with-other-perp-protocols-fefbd6622179

5. What motivated you to make contango?

We built the original v1 with dated futures because we realized it was a missing pillar in defi and some of us also wanted to trade ‘cash and carry’ as you would do in cefi/tradfi, profiting from the basis spread. Eventually the liquidity on fixed-rate markets didn’t increase enough to allow for significant trading, so we switched to variable-rates markets for the current v2, where liquidity is deeper.

If you want to read more about Contango, check out their documents here: https://docs.contango.xyz/cperps/how-it-works