Seychelles-based cryptocurrency derivatives exchange, CoinFLEX, has released a physically-settled futures contract for Facebook’s proposed crypto, Libra, according to a Monday report by Bloomberg.
More like a betting program, the exchange is offering a derivative that delivers Libra tokens based on the probability that Facebook Libra coin will become operational by the end of 2020 as the social media giant claimed.
According to CoinFLEX’s Hong Kong-based Chief Executive Officer, Mark Lamb:
“Facebook has the ability to rival the entire global banking system from day one, but, because of that fact, when that first day will be is far from certain. […] The political backlash has been brutal, and it’s anyone’s guess if Facebook will get this over the line.”
The exchange noted plans to hold what it calls an Initial Futures Offering (IFO) on October 24, wherein the initial price of Libra futures is set at 30 cents, after discussions with investors and traders.
The price is intended to be a level that will attract divergent views to encourage trading, with Lamb adding that, this initial price equates to a roughly 30% chance that Libra will be operational by December 2020. While investors that missed the IFO can still trade the contract at prices that better reflect their stance on Libra within 30 minutes of the offering, there are also provisions for an investor to acquire Libra at a discount if correct.
For instance, an investor with an 80% chance to Libra being operational will pay an equivalent of 80% for Libra before the contract expires. If correct, the investor gets a 100% Libra token when the contract expires.
Meanwhile, investors can as well bet against Libra launch next year despite ongoing regulatory struggles.
“For both long and short trades, gains will be capped at $1.1 per Libra to account for changes in the value of the currencies backing the stablecoin,” the report reads.
However, since the offering is based on probability, if Libra is not operational by the statement date, investors are likely to lose out their initial investment as they will receive nothing.
In our most recent report concerning the Libra project, we noted that tech giant, IBM is open to collaborating with Facebook on the effort despite PayPal pulling out last week.