Differentiate between a Forward Contract and a Futures Contract.
Both are agreements to trade an asset at a future date, but futures are standardized, traded on regulated exchanges, and guaranteed by a clearing house. Forward contracts are customized, traded over-the-counter (OTC) between two private parties, and carry higher counterparty risk.
Futures are highly liquid, while forwards are less so.
Glossar
Forward Contract
Instrument ⎊ A binding agreement to buy or sell a specified quantity of a cryptocurrency asset at a predetermined price on a future date, established off-chain but often settled via on-chain mechanisms or collateral management.
Forward Contracts
Structure ⎊ Forward contracts, within cryptocurrency and derivatives markets, establish a customized agreement for the future exchange of an asset at a predetermined price and date, differing from standardized futures contracts through their bespoke nature.
Futures Contracts
Mechanism ⎊ Futures contracts, within cryptocurrency and broader financial derivatives, represent standardized agreements obligating parties to transact an asset at a predetermined price on a specified future date; these instruments facilitate price discovery and risk transfer, extending beyond traditional commodities to encompass digital assets and complex financial indices.