How Does a Futures Contract on a Potential Hard-Forked Coin Work?
Before a controversial hard fork, some exchanges offer "fork futures" or "IOU" contracts for the potential new coin. These contracts allow traders to speculate on the future price of the new coin before it even exists or is officially listed.
They provide a mechanism for price discovery and allow token holders to hedge their risk or profit from the market's expectation of the fork's outcome.
Glossar
Settlement Price
Price ⎊ In cryptocurrency derivatives and options trading, the settlement price represents the final value used to determine payments between counterparties at the expiration of a contract.
Fork Futures
Contract ⎊ Fork futures are specialized derivatives contracts that enable speculation on the outcome of a potential blockchain hard fork.
Price Discovery
Revelation ⎊ Price discovery within cryptocurrency derivatives represents a dynamic process where previously unobservable asset values are ascertained through continuous trading and order flow interaction, particularly pronounced in nascent markets lacking established fundamentals.