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Introducing Forward: Decentralized Derivatives Exchange

March 22, 2022

For the past two years, Decentralized Finance or DeFi has been a financial innovation that many have been paying attention to. DeFi had massive growth midway through 2020 with the Total Value Locked (TVL) in the ecosystem increasing from $13B to $100B in 2021. In other words, TVL grew eight times in a year, this comes alongside twenty times the number of total users. This result comes from a DeFi service called “Yield Farming” which delegates users who provide liquidity to the ecosystem to receive incentive rewards, the platform then shares their income from transaction fees, and rewards users with Governance Tokens such as Compound, Pancake, SuShi etc. These platforms have higher investment returns than traditional finance — hence why great interest has been generated by DeFi — therefore many other platforms have subsequently been launched based on this success.

Interface of Forward Derivatives Platform

Total Value Locked (TVL) History from DeFi Pulse

Today, DeFi has a great diversity of services with the most popular services (apart from GameFi) being Decentralized Exchange and Lending-Borrowing. In a Decentralized Exchange, there is no difference in purpose to Binance, Coinbase or KuCoin — but only a little difference regarding some methods of back-end, we will avoid boring you with the technical details here! The point is that we all expect a profit after selling. We know that the price depends on demand and supply, so if demand is higher than supply, the price will go up but if supply is higher than demand, the price will go down. However, what we don’t know is whether the market will perform in the way we planned, so if we are everyday investors then we all need profits from capital gains when the closing price is higher than the entry price.

Though, what if the market goes down for weeks, months or maybe years? How do we plan for this scenario?

In spot exchanges both centralised and decentralised, it is not possible to protect our gain from negative events such as when Bitcoin drops 20% in a day. That’s why we need an exchange where we can make a profit even in bear markets. This exchange is called a “Derivatives Exchange” — this would be one of tools to use for protecting assets, and it has the advantage of decentralization which helps users reduce the complexity of accessibility with censorship resistance. So, every user can use this platform and the only thing they need is a supported wallet.

What is Forward ?

Forward is a DeFi Platform which focuses on Derivatives Exchange. Essentially, users can open Long/Short positions with leverage to increase their purchasing power in a bull market or to protect their assets from a bear market. This is alongside Lending-Borrowing services — both main services have been created to support each other. Forward wants to create real demand-supply from lending and borrowing, this is done by requesting users who want to open positions on the platform to place their assets as collateral, this is to borrow other paired assets which depend on the paired assets they wish to trade.

Forward operates on EVM based Chain but begins with Binance Smart Chain due to its low fees and fast transaction. Forward protocol is designed based on liquidity pools to protect front-running investment. Additionally, Forward has been planning to use NFTs to promote the privileges and special features of the platform.