# Why expirables?

## Contract types

![State of crypto derivatives market by Jump Capital.](https://11462415-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FlYcfaHqcHo4hLwj7Q5M7%2Fuploads%2Fh4qk1oVN6YDi6dkkSUQB%2FMarket%20map%20JUMP%20\(3\).png?alt=media\&token=01b66584-14fb-4d48-98c3-369b924b514b)

Contango is the expirable leader in DeFi. To understand why we need expirables, let's dive into the types of contracts available in CeFi:

* **Perpetual contracts -** Standardised **i**nstruments without an expiry date that can be held indefinitely and where funding fees are periodically exchanged between long and short on a regular basis, e.g. each 8h, to keep the futures price tethered to the spot price. These [funding rates](https://contango-2.gitbook.io/exchange/resources/glossary#funding-rates) are unpredictable, i.e. depending on the market conditions you can receive or pay money. Over a longer-term horizon, funding fees can start biting into your profits, as high as 30% annualized ([Deribit insights](https://insights.deribit.com/market-research/perpetual-swaps-comparisons-and-findings/)). In a nutshell, you can't reliably control your costs with perpetuals. 
* **Expirable contracts  -** These instruments have [expiry dates](https://contango-2.gitbook.io/exchange/resources/glossary#expiry-date), e.g. a monthly contract can be traded up to the end of the month. When a trader buys or sells a contract, all costs are known upfront.

The following table compares the main pros and cons of each contract type.

<table><thead><tr><th width="157.00000000000003">  </th><th>Perpetual futures</th><th>Expirable contracts</th></tr></thead><tbody><tr><td>+</td><td>No expiration date</td><td>Control about the costs</td></tr><tr><td>-</td><td>No control about the costs</td><td>Expiration date</td></tr></tbody></table>

{% hint style="info" %}
In our opinion, we do not see perpetual and expirable contracts as competitors. Both are here to coexist: perps work well on a short time horizon where funding rates won't make a big dent in the position, whereas expirables are more suitable for longer-term trades.
{% endhint %}

## Market size

In CeFi **the total volume traded in 2021 was $112 trillions.** Expirable futures represent a small portion ($6.6 trillion), yet their volume kept growing in 2021 - about 2.4x compared to 2020 (source: [TokeInsight](https://s2.tokeninsight.com/static/levelPdf/TokenInsight_2021_Yearly_Crypto_Trading_Industry_Report_compressed.pdf)).

![](https://11462415-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FlYcfaHqcHo4hLwj7Q5M7%2Fuploads%2FvOXyElHwAZWZgcg4olNO%2Fchart.svg?alt=media\&token=b6637b8d-b41f-4c31-a37f-28b2344a71c2)