The bitcoin perpetual swap is an innovation in crypto markets that was pioneered in 2016 by the exchange BitMEX and quickly adopted by rivals, including Binance and FTX.

Perpetual swaps are like futures contracts without expiration dates; they can be held indefinitely without the need to roll over contracts as they reach maturity.

The decentralized exchange Contango says it's pushing back against that crypto-market convention – with plans to offer "expirable" contracts that more closely resemble the traditional futures traded on exchanges like CME, linked to everything from bitcoin (BTC) to crude oil and pork bellies.

Contango says its offering will be the first of its kind on a decentralized exchange, or DEX. The firm said Thursday in a statement that it raised $4 million in a seed round in December, at a $45 million valuation, from an investment group led by ParaFi and including Coinbase Ventures, Spartan Group and Amber Group.

The company says its platform is undergoing security audits and that it plans to launch a beta version later in the summer.

The downside of perpetual futures is that funding rates (periodic payments that are long or short based on the difference between perpetual and spot prices) are largely unpredictable, according to Contango’s co-founder, Kamel Aouane.

Whereas with expirable futures, investors are in full control of the cost from the beginning.

“With perpetual futures, if you are on the wrong side of the market, you are bleeding money,” said Aouane, in an interview with CoinDesk.

Contango prices futures using spot and interest rates, as implied by the interest rate parity, a formula well known in traditional finance.

There are currently no other DEX’s that offer expirable futures in the crypto market, according to a report on the state of the crypto derivatives market by Jump Crypto, the cryptocurrency arm of the decades-old trading firm Jump Trading Group.

In the report, Jump Crypto wrote that the decentralized derivatives markets across both futures and options are “under-developed” compared with their centralized counterparties.

Market concentration in the derivatives space is primarily focused on centralized or "CeFi" exchanges such as Kraken, FTX and Binance – which all offer expiring and perpetual futures.

Contango says that, by taking advantage of liquidity pools of underlying fixed-rate markets, it's able to offer the same order of magnitude of liquidity and price impact as major centralized exchanges.

Contango is going to offer expirable futures without order books or liquidity pools. When a trader opens a position, the protocol borrows on the fixed-rate market, swaps on the spot market, then lends back on the fixed-rate market.

By taking advantage of liquidity pools of underlying fixed-rate markets, Contango is able to offer the same order of magnitude of liquidity and price impact as major centralized exchanges.

For crypto traders, there might be arbitrage opportunities between Contango's platform and major exchanges like Binance, Aouane said.

“It will be interesting to observe the evolution of the derivative space and Contango’s contribution to price alignment between CeFi and DeFi,” said Aouane.