Contango

I know we'll talk about, about really the price spreads between the U S and, um, JKM and the Dutch TTF.

But I think it was a couple of days ago, JKM actually went into Contango for that, that December benchmark price, you know, was, was a little bit higher, I think five and a half cents into Contango as the previous close was a backwardation.

And that's a result.

We're starting to see some of these cargos come out of straight at Hormuz.

Right.

And then there is a word that describes that type of upward sloping curve, and that is, Dan? Contango.

Contango, which is the normal state of affairs.

Am I right on that? Exactly.

So that's what you would expect the shape of the curve to be.

That is what we mean by roll return.

And whenever you're rolling your exposure from contract to contract, that is realized.

Now, in the other direction, as you were mentioning earlier, Contango, If something is in an upward sloping curve and it was, let's say, 95 in September but 100 in October, then you're selling at 95 and you're buying at 100 just to maintain the barrels of oil that you're exposed to.

So the future price should be higher.

Contango is normal.

Contango is a market at peace.

But backwardation is the exact opposite.

It's a market in a state of panic.

So what I'd look to allocate to for exposure to growth in tokenized equities is certainly much more the AMM complex, Uniswap, Radium, Metaora, and some more there.

And then last thing on money markets is like, if I see a term structure in Contango, which is currently the case on Boros, that to me means interest rates are going higher, both in the PERPS complex and in addition to on-chain lending as well.

So if you see active loans grow and interest rates rising, the money market complex will be able to monetize that much higher rate of interest, which is what I really think is the alpha component in the outlook for on-chain lending.

So

But as a signal for markets, the most important thing is the shape.

So whether or not you're in backwardation or you're in contango.

Contango, weak market.

Backwardation, strong market.

Which is the exact opposite of what a lot of people will look at looking at the curve.