Trading contracts or assets (including cryptocurrency assets) involves price discovery. This is the process of determining the price of an asset in the marketplace through open bidding. Both tangible and intangible factors and probabilities on different outcomes influence the price discovery process. Finally, the equilibrium point is formed, the point when the supply is balanced by the demand.
Once there are some limitations on buy or sell, fees or transaction frictions the price discovery process can be aggravated. The fewer impediments there are, the more accurate price discovery is — as simple as that.
Price discovery is different from valuation as as price discovery is a market-driven mechanism while valuation is a model-driven mechanism. The valuation results base on suppositions and models and therefore may be wrong. The asset holders find the price discovery to be a more important mechanism. The reason is that the verified liquidity and the price at which the asset can be either bought or sold determines the financial result of the economic subject while the valuation is a supplementary method.
At Xena Exchange, we launch the first ever derivative contract on GRAM. We strive at providing traders with an opportunity to get a long position on GRAM contracts as they might have been deprived of this option due to the limitations during the token sale. We expect that the trading volume and the demand for the new contract will be high. Possibly, the GRAM contract price will go up due to the influx of new buyers while the sellers who are the current GRAM holders are unlikely to get short positions outside the spot market. That is to say, if someone wants to sell GRAM, they are likely to put the orders on spot exchanges and sell for BTC. This is why we expect the GRAM synthetic contract price to grow.
Once GRAM is listed on spot exchanges the price of Xena Listed Perpetuals contract on GRAM will depend on the index based on the spot exchanges rates. We do not offer GRAM spot trading, but we provide the market participants with an opportunity to get a long or a short position on GRAM contract and let the market run the initial price discovery. A great deal of small buyers are there waiting to get into long position, which is likely to redound positively on the GRAM.
Nevertheless, there are also market participants who are for some reason not interested in price discovery or are willing to see the GRAM price drop (possibly, they failed to buy earlier and now want to bring the price down before buying). We do not support this position and are interested in a fair price discovery. We are positive-minded about the contract prices. Many people lacked the opportunity to go long on GRAM and here comes such a chance — with GRAM contract.
Besides, it’s worth knowing that big holders wait for the GRAM token to enter the spot exchanges; this way, the token itself is likely to get exposed to some pressure from their side. This doesn’t look like the case for the GRAM contract to be traded on Xena Exchange.
Xena Exchange is one of the early Telegram Passport adopters as mentioned in the Telegram TON official blog.
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