Key Insights
- Total trading volume in Q3 2024 was $2.4 billion, up 251% QoQ and up 15X in six months. Every chain saw at least 70% growth QoQ, except for Gnosis.
- Contango had a total open interest (OI) of $269 million, up 42% QoQ and 508% in six months. Base and Optimism showed significant growth, reaching $31 million (+252% QoQ) and $25 million (+896% QoQ), respectively.
- Contango added support for Euler and Fluid, bringing the total to 16 money markets. Launches on Avalanche and BNB Chain brought chain deployments to ten EVM-compatible chains.
- Contango will be launching its native token, TANGO, through a curated fixed-price sale on Fjord, scheduled from Monday, October 21st to Monday, October 28th, 2024. Up to $3 million worth of TANGO will be available at a valuation of $45 million, with no cliff or vesting period imposed on the purchased tokens.
Primer
Contango is a DeFi protocol that allows users to loop various assets onchain, creating leveraged positions similar to perpetual contracts but with lower funding costs. It enables trading by building positions on top of spot and money markets, thus aggregating liquidity from both markets and facilitating large trades with minimal impact on rates and prices. Contango supports trading on multiple chains and markets, including ten chains, 13 money markets, and more than 250 trading pairs.
Contango is designed to accommodate various types of users, providing distinct interfaces for different needs. Loopers can automate their recursive lending and borrowing strategies, while advanced traders can utilize the professional trade interface to take directional bets. Farmers and newcomers can leverage the simplified strategies to farm yields and rewards from LSTs, LRTs, and stablecoin pairs. With its comprehensive looping capabilities and UX, Contango positions itself as a leading looping layer in DeFi.
Key Metrics
Analysis
During Q3 2024, Contango launched on Avalanche and BNB Chain, bringing the total chain deployments to ten EVM-compatible chains.
As of the end of Q3 2024, Contango had a total open interest (OI) of $269 million. Ethereum continued to be the leading chain by open interest with a total OI of $143 million, accounting for 53% of Contango’s total OI. Ethereum’s OI began surging in June 2024 due to a combination of (s)USDe pairs allowing users to farm Ethena, eETH pairs from Etherfi, and increased popularity of looping on Contango on LRT/LST via Ethereum due to better liquidity.
Arbitrum continued to be the second leading chain by OI with $62 million, representing 23% of total OI. The large increase in Arbitrum OI in March was due to Pendle PT trading on Silo, and the decline in April was due to the PT expirations. Base and Optimism began to emerge as the next two largest chains by OI, with Base ending Q3 2024 at $31 million (driven by the SuperFest grant on Base) and Optimism at $25 million (driven by the OP grant on Optimism). The combined OI of the other Contango chains was $9 million at the end of Q3 2024.
Open interest increased on every chain in Q3 2024 except for Gnosis.
The leading chains by OI were also the leading chains by volume in Q3 2024. Arbitrum led with a total Q3 volume of $1.4 billion, accounting for 58% of total Contango volume and increasing volumes by 426% QoQ. Ethereum was in second with $622 million in volume, accounting for 26% of Contango’s total volume, and increased volumes by 72% QoQ. Base and Optimism were next with volumes of $233 million (+938% QoQ) and $133 million (+494% QoQ), respectively. The remaining chains combined for a total quarterly trading volume of $42 million, and no chain amongst all of Contango’s deployments saw a gain in trading volume less than 70% on a QoQ basis, except for Gnosis which fell 21% QoQ.
Contango’s total trading volume in Q3 2024 was $2.4 billion, up 251% QoQ and up 15X in six months.
Throughout Q3 2024, Contango steadily added support for more money markets, including Euler and Fluid, bringing the total to 16 money markets live across ten EVM chains.
There were changes in the leading money markets in Q3 2024. Aave jumped to the lead with a total of $1 billion in volume, accounting for 44% of total Contango volume, and up 368% QoQ. Compound saw a massive spike due to listing more LRTs and incentivizing Arbitrum markets via its LTIPP grant, jumping to the second spot with a total volume of $720 million, up 130X QoQ and accounting for 30% of total Contango volume. Dolomite jumped to third place with $251 million in volume, which was up 890% QoQ. Morpho, which was the leading protocol in Q2, dropped to fourth with $269 million in volume, which was down 16% QoQ. The combined value of the other money markets was $134 million.
In Q3 2024, Contango also added support for Nexus and OpenCover to protect users against hacks/exploits, oracle failure/manipulation, severe liquidation failures, and governance attacks.
During Q3 2024, Contango saw an increase in active users and traders, continuing the trend of a year straight of user and activity growth. Notably, the breakdown of chains by users differs from the OI and volume breakdown. Arbitrum and Base are the leading chains together accounting for 85% of trades. This distribution suggests that whales are leveraging Ethereum whereas smaller traders are operating on L2s where transaction fees are lower.
Activity on Contango for the year peaked in mid-July when the platform recorded over 6,000 trades with nearly 5,000 traders. This peak coincided with the ongoing grants programs including LTIPP on Arbitrum, SuperFest on Base, and the OP grant program on Optimism.
At the end of Q3 2024, Contango reached an all-time high Total Value Locked (TVL) of $37 million, up 73% QoQ and 349% over the past six months. Ethereum is the leader with a TVL of $19 million, while Arbitrum is second with $9 million, together accounting for 77% of the total TVL. Base and Optimism followed with $3.7 million and $4 million, respectively. Notably, the TVL did not decrease despite OI and volume dropping with the conclusion of the grants programs.
TANGO TGE
Contango will be launching its native token, TANGO, through a curated fixed-price sale on Fjord, scheduled from Monday, October 21st to Monday, October 28th, 2024. Up to $3 million worth of TANGO will be available at a valuation of $45 million, with no cliff or vesting period imposed on the purchased tokens. The sale aims to offer a broad opportunity for participants to acquire TANGO without restrictive vesting requirements, promoting equitable access.
There will be no immediate selling pressure following the sale, as no tokens will be unlocked for team members or investors. The airdrop for early users will be conducted through the oTANGO mechanism, which discourages users from selling below the set valuation by offering a 0% discount.
In addition, an 80/20 liquidity pool on Balancer will be established, wherein 80% of the pool will consist of TANGO tokens and 20% of another asset. TANGO stakers who choose to provide liquidity to this Balancer pool will be eligible to earn rewards in the form of 100% of Contango protocol fees, along with Balancer pool fees and incentives.
Closing Summary
During Q3 2024, Contango continued its growth, with increases across multiple key metrics. Total trading volume reached $2.4 billion, up 251% QoQ and 15X over six months. Open interest rose to $269 million, up 42% QoQ and 508% in six months. Base and Optimism emerged as bright spots, reaching OIs of $31 million (+252% QoQ) and $25 million (+896% QoQ), respectively.
Contango also expanded its ecosystem by adding support for Euler and Fluid, bringing the total number of supported money markets to 16. Additionally, the platform launched on Avalanche and BNB Chain, increasing its total deployments to ten EVM-compatible chains.
Looking forward, Contango aims to further strengthen its ecosystem through the launch of its native token, TANGO. The token launch is expected to enhance community participation by providing opportunities for direct involvement in liquidity provisioning and staking. With no restrictive vesting requirements and incentives tied to Balancer pool participation, the TANGO token sale will lay the foundation for the platform’s continued growth and stability.
