Exchanges Rush to Launch Futures Contracts: The Underlying Profits, Impact on Spot Markets, and Liquidity Competition
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Exchanges Rush to Launch Futures Contracts: The Underlying Profits, Impact on Spot Markets, and Liquidity Competition
Binance frantically launches futures contracts, as if wielding a "Death Note" — whoever gets listed drops dead instantly?
Navigating Web3 tides with focused insightsAuthor: Professor Suo
"Why List Perpetual Contracts?"
Recently, or rather over the past year, Binance has listed a massive number of perpetual contracts. I haven't counted the exact number, but it's highly likely that they've already surpassed many once-top-tier "derivatives exchanges."
Nowadays, most exchanges prioritize listing "contracts" over spot trading pairs. The reasoning is largely the same across the board: for assets with high market caps, listing spot exposes users to greater risks of buying at the top. But with contracts, that concern diminishes—users can go long or short.
This is exactly why platforms like Binance, OKX, and Bybit have far more contract listings than spot pairs.
Moreover, spot trading often requires actual "reserves" to meet user withdrawal demands, whereas contracts don’t require this at all—especially since they’re not physically settled.
From a purely observational standpoint, an exchange exists to facilitate "trading." As long as it provides trading pairs and earns fees, it profits. So naturally, exchanges will list whatever generates higher fee income. That’s just business logic.
And isn’t leverage itself also a revenue generator? Not just from fees, but from amplified trading volume?
So from an exchange’s perspective, prioritizing contracts is completely rational—it’s all about maximizing "trading fee revenue." Unless you insist on believing exchanges profit from user losses (PnL), in which case there are even more speculative theories out there. But I’ll leave those to your imagination—no need to go down that rabbit hole.
"Why Spot Listings Have Greater Impact"
This leads us to another question: why do spot listings affect exchanges—and prices—more significantly?
When spot trading is enabled, exchanges must hold actual reserves to support withdrawals. This locks up a significant portion of circulating supply within exchange wallets. Since many users won’t actively trade these holdings, the amount of truly available supply in the open market becomes much smaller than the nominal circulating supply.
When an exchange lists a spot pair, it must first secure a reserve of that token—the wallet addresses are usually public and transparent.
Therefore, spot listings have a much stronger positive impact on price compared to contracts. More importantly, listing spot reduces overall liquidity because large amounts of "spot tokens" become trapped inside exchange wallets.
This becomes especially problematic when on-chain monitoring reveals low balances of a particular token on an exchange. Users may then force a short squeeze by mass-withdrawing, compelling the exchange to buy tokens on the open market. This happened before with $REEF, when @gate_io didn’t have enough reserves, leading @dotyyds1234 to trigger a brutal squeeze 😂.
"The Battle for Liquidity"
The core difference between spot and contracts boils down to liquidity dynamics.
Contracts offer excellent liquidity. Since no actual tokens need to be purchased upfront, their immediate price impact is minimal. Price movements only amplify later through arbitrage activities. This makes contracts ideal for arbitrageurs, further boosting liquidity.
You might notice that for many tokens, spot trading volume is dwarfed by contract volume.
With contracts, traders can profit in both rising and falling markets, which naturally enhances liquidity even further.
Take $10,000 as an example—on the futures market, it could easily generate $200,000 in turnover. Exchanges earn fees based on volume, so naturally, they favor products that drive higher transaction flows.
In contrast, spot liquidity has been weak lately. Given the current downtrend across altcoins, most newly listed spot tokens experience a brief spike followed by continuous decline. Very few manage sustained upward momentum post-listing—even well-funded VC-backed projects struggle. Can meme coins built purely on hype really expect better results?
Hence, the only viable option to keep users engaged in a bearish environment is contracts—where you can profit even when prices fall.
So from the perspective of enabling users to make money, listing contracts makes perfect sense.
"Final Thoughts"
For holders with large positions, having a Binance contract listing offers a much better opportunity to exit. With spot alone, full execution might not even be possible.
Spot markets often lack depth and volume. Dumping a large position directly on-chain is extremely difficult. But opening a large contract position? Much more feasible.
I recall $ARKM—one group member held over 10% of total supply. He couldn't dump it via spot, so he opened a full contract position instead and gradually offloaded his holdings. Mission accomplished.
In reality, spot and contracts aren't mutually exclusive—it all depends on how you use them, and how you understand liquidity.
For most assets, the better the liquidity, the faster it can crash; the worse the liquidity, the easier it can pump.
Take NFTs and BRC20 tokens as examples—they typically exhibit poor liquidity, making sharp pumps possible despite low underlying demand.
Given how lucrative fee generation is, exchanges naturally want a piece of the action. If they can't list spot, they'll definitely push contracts.
At the end of the day, it's all business. Exchanges can't control prices. If someone goes short, others can simply buy on-chain and blow up the shorts 😂.
Assets with strong liquidity tend to be controlled by market makers.
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