Forwards

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Forward Issuers

Traders enter long positions when expecting price increases and short positions when anticipating declines, while forward contract issuers take opposite stances, for example, creating short position contracts when they expect prices to rise, which may allow them to purchase assets below market price from counterparties in the future.

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Collateral

To enter a forward contract, both parties must deposit a specified collateral. This collateral can be redeemed once the assets to be exchanged, as stipulated in the contract, are deposited. Initially, only the collateral is required, not the actual assets. The assets can be deposited any time before the contract’s exercise date. If one party fails to deposit the assets, the other party has the right to claim the defaulting party’s collateral.

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$STRIKE As Additional Collateral

$STRIKE (Strike Finance Native Token) can be used as an additional collateral, but not the sole collateral, in a forwards contract. If it is used as an additional collateral, traders will get a discounted trading fee. If the collateral gets liquidated, $STRIKE will be burnt.