Facebook’s proposed blockchain and cryptocurrency Libra is some time away from a formal launch but it is already generating an economy.
CoinFLEX, a crypto futures exchange, has launched a futures contract that bets on whether Facebook’s futures contract will launch by December 30 next year or a settlement date. As is the case with all things crypto, a fancy term – Initial Futures Offering (IFO) –is being used to describe the contracts. The offerings are also intended to pump up usage of FLEX coin, the exchange’s native token in transactions. CoinFLEX had previously held futures offerings for Polkadot and Dfinity, two crypto projects that have yet to launch their tokens. Bloomberg states that trading has been “muted” in these offerings.
CoinFLEX CEO Mark Lamb told Bloomberg that the political backlash against Facebook has been brutal and “it’s anyone’s guess if Facebook will get this over the line.” “Facebook has the ability to rival the entire global banking system from day one, but, because of the fact, when that first day will be is far from certain,” he said.
The contracts are essentially a bet on the social media giant’s ability to meet the contract deadline. If Facebook accomplishes the launch on or before Dec. 30 next year, then investors will receive physically-settled Libra tokens. If the launch does not occur by then, investors lose their money.
Why Investors May Bet on Libra Tokens
The profits for investors lie in the margin amounts they put up for the trade. For example, if they put up 50% of the price of the contract, then they could get Libra tokens at half price.
There is also the fact that the Libra documentation mentions that the token will be available only through authorized resellers. The futures contract might be a good way to book the tokens early. However, it is unclear whether CoinFLEX has applied for or already been granted an authorized reseller status.
According to the Bloomberg report, the initial price for a future Libra token at CoinFLEX is set at 30 cents. Subsequent token prices will be subject to market dynamics and investors will be required to pay a portion of the contract price as bets. CEO Lamb said that both long and short trades will be capped at $1.1.
Facebook’s Libra cryptocurrency and blockchain has faced growing backlash from lawmakers and regulators around the world, leading to questions about its launch date and future existence. Libra co-creator David Marcus has assured regulators that the blockchain will not launch without addressing their concerns completely.
Amidst a mounting chorus of questions and criticism, it is possible that Facebook might have to delay or, even, cancel the project. The company hinted as much in a June filing, when it stated that Libra may not launch due to regulatory scrutiny. Online payments processor PayPal, which had signed a Letter of Intent to join Libra’s governing council, withdrew from the association last week, citing the social media behemoth’s handling of regulators.