Market types

Markets supported by the Aroon network are primarily focused on cash settlement. When a derivative market expires or a trader decides to close a position, there is no delivery of the actual underlying asset. Instead, the cash value equivalent, based on the market's settlement asset, is exchanged.

All markets on Aroon are created via a community-driven governance process. Members of the community propose markets, and those that secure approval through a governance vote become active and available for trading.

Aroon currently supports two main types of derivatives markets: futures markets with a set expiration date, and perpetual futures markets that do not have a predefined expiration.

Futures

In cash-settled futures markets on Aroon, traders can place orders and take positions with margin to speculate on the future value of an underlying asset at a specified date. The price in the futures market represents a prediction of the asset's future value, which can significantly differ from its current spot price.

Each futures market has a designated settlement asset, which might differ from the assets represented in the market's trading pair.

Settlement in futures markets occurs under various conditions: when a position is closed, when the market's mark price changes, and upon the market's expiration, leading to the closure of all open positions.

Key Concepts and Resources

• Settlement Process

• Market Lifecycle

• Managing Positions and Margin

• How to Propose a Futures Market

Perpetual Futures

Unlike traditional futures, perpetual futures markets on Aroon do not have an expiration date, allowing traders to maintain positions indefinitely. Traders engage in mark-to-market settlements, adjusting cash flows with each change in the mark price.

Additionally, perpetual markets have a unique settlement feature called periodic settlement to ensure the perpetual market price remains aligned with the underlying spot market. This involves funding payments exchanged at the end of each funding period, the schedule of which is determined in the market's governance proposal.

Like futures markets, perpetual futures also have a specific settlement asset, which may not be identical to the assets in the trading pair.