Key InsightsContango launched its native token, TANGO, in a fixed-price sale on October 21. At the end of Q4, 105.4 million TANGO tokens were circulating at a $5.7 million market cap.The airdrop for early users was conducted through the oTANGO mechanism, which offered TANGO options at a discount. By the end of Q4, 12% of oTANGO supply—22.5 million tokens—had been exercised, generating $1.6 million for the Contango Treasury.Contango's total open interest (OI) was $464.5 million, up 73% QoQ and 110x in 2024. Ethereum's OI grew 84% to $273 million on December 31.Total trading volume in Q4 was $2.2 billion, down 9% QoQ but up 64x YoY, with the majority of volume occurring on Ethereum and Optimism in 2024.Contango enabled fees in Q4, which had no meaningful impact on OI or volume in Q4.PrimerContango is a DeFi protocol that allows users to loop various assets onchain, creating leveraged positions similar to perpetual contracts but with lower funding costs. It enables trading by building positions on top of spot and money markets, thus aggregating liquidity from both markets and facilitating large trades with minimal impact on rates and prices. Contango supports trading on multiple chains and markets, including 10 chains, 12 money markets, and more than 300 trading pairs. Contango launched its native token, TANGO, in Q4 2024.Contango is designed to accommodate various types of users, providing distinct interfaces for different needs. Loopers can automate their recursive lending and borrowing strategies, while advanced traders can utilize the professional trade interface to take directional bets. Farmers and newcomers can leverage the simplified strategies to farm yields and rewards from LSTs, LRTs, and stablecoin pairs. With its comprehensive looping capabilities and UX, Contango positions itself as a leading looping layer in DeFi. Website / X / DiscordKey MetricsAnalysisOpen Interest (OI) on Contango increased by 73% QoQ to $464.5 million in Q4. Ethereum remained the leading chain by OI with $273.3 million, an 84% increase QoQ. Ethereum comprises 59% of Contango’s total OI and has remained the dominant chain for open interest since June 2024. weETH pairs from ether.fi, and wstETH pairs from Lido attracted the highest OI due to the increased popularity of looping LRT/LSTs on Contango.Arbitrum remained the second-largest chain for open interest, growing 12% QoQ to $62 million—15% of total OI. The leading pairs on Arbitrum were weETH/ETH on Aave V3 and Compound and wsETH/ETH on Aave V3 and Fluid. OI on Base grew 99% QoQ to $60.4 million, mainly driven by wstETH trading on Morpho. Optimism experienced the highest OI growth, increasing 109% QoQ to $50.9 million, with wstETH/ETH as its largest pair; it also accounts for most volume on the rETH/ETH pair, which is available only on Optimism and Arbitrum.At the end of Q4 2024, the combined OI of the other Contango chains (Scroll, Linea, BNB, and Polygon) was $10.3 million.The leading chains by OI were also the leading chains by volume in Q4 2024. Ethereum grew 46% QoQ to $902.5 million, flipping Arbitrum as the top chain by total volume. The growing popularity of BTC LSTs, such as ether.fi’s eBTC and Lombard’s LBTC contributed to increased volume on Ethereum.Volume on Arbitrum fell 39% in Q4 to $871.1 million, accounting for 11% of Contango volume in Q4. Base and Optimism were next, with volumes of $231.0 million (flat QoQ) and $131.6 million (+2% QoQ), respectively. Scroll entered the top 5 with a 1,376% QoQ increase to $27.5 million, almost entirely due to wstETH/ETH trading growth. Avalanche grew 461% QoQ to $21.3 million, largely due to sAVAX/AVAX and USDC/USDT trading growth. The remaining chains combined for a total quarterly trading volume of $27.0 million. weETH/ETH was the most popular pair on Contango, with $928.2 million in total volume during Q4, a 28% decline QoQ. wstETH/ETH was the second most popular pair with $375.2 million in total volume, a 42% QoQ increase. ezETH/ETH saw an 83% rise to $86.5 million, overtaking ETH/USDC as the third most popular pair.Contango enabled fees in Q4, which had no meaningful impact on OI or volume in Q4. Contango now takes 5 bps on correlated pairs (like wstETH/ETH) and 25 bps on non-correlated pairs (like ETH/USDC) but discounts are available for stakers. Contango’s total trading volume in Q4 2024 was $2.2 billion, down 9% QoQ. Volume was up 10,960% YoY from $4.2 million at the end of Q4 2023.Throughout Q4 2024, Contango steadily added support for more money markets, including ZeroLendRWA and SparkSky, bringing the total to 12 money markets across ten EVM chains.Aave led for the second quarter in a row, although volume decreased by 22% QoQ to $688.4 million. This was largely due to a 53% decrease in wstETH/ETH trading, equivalent to a $252 million loss in volume. Compound, the second most used money market by volume, saw a 13% decrease QoQ to $623.7 million. Compound saw an 82% decrease in wstETH/ETH trading, although increases in ezETH/ETH and rsETH/ETH helped offset losses. Morpho jumped to third place with $56.6 million, up 34%, mainly due to sUSDe/DAI trading. Moonwell grew 148% QoQ, the highest for any money market in Q4; it's $56.6 million in volume came from a 197% increase in wstETH/ETH trading.Contango saw decreases in network activity for the first time in 2024 in Q4. Average daily total trades decreased by 37% QoQ to 286, and average daily traders decreased to 140.While Arbitrum and Base typically comprise the majority of activity, they decreased by 71% and 53% QoQ, respectively. This distribution suggests that whales leveraged Ethereum, whereas smaller traders operated on L2s with lower transaction fees. Optimism spiked in November following Contango’s announcement that they would give away 100,000 OP tokens, worth $176,000 at the end of Q4.At the end of Q4 2024, Contango reached a Total Value Locked (TVL) of $43.1 million, up 18% QoQ and 3,538% over the past year. Ethereum remained the leader with a TVL of $20.8 million, while Arbitrum is second with $7.9 million, accounting for 67% of the total TVL. Base and Optimism grew in Q4, 107% and 48%, respectively. TVL decreased dramatically on Ethereum and Arbitrum near the end of Q4 2024.TANGO TokenContango launched its native token, TANGO, through a curated fixed-price sale on Fjord between October 21 and October 28, 2024. The sale sold out in less than 4 hours and raised $3 million. At the end of Q4, 105.4 million TANGO tokens were circulating at a $5.7 million market cap. The airdrop for early users was conducted through the oTANGO mechanism, which offered TANGO options at a discount. To protect Contango's seed valuation, the oTANGO mechanism set the discount to 0% when TANGO is priced at $0.045, corresponding to an FDV of $45.0M. If the TANGO price falls below $0.045, the redemption price remains fixed at that level. However, when the price rises above $0.045, a discount greater than 0% is applied, reaching 75% once the price hits or exceeds $1. This design encourages users to hold their tokens in anticipation of future price increases as the token gains success.On November 4, TANGO became claimable; on November 25, oTANGO became redeemable. By the end of Q4, only 12% of the oTANGO supply—22.5 million tokens—had been exercised at discounts ranging from 2% to 23%, generating $1.6m in USDC proceeds for the treasury.After the initial sale on Fjord, an 80/20 pool on Balancer was seeded to create the first spot liquidity for TANGO on Arbitrum. Liquidity providers earned rewards through protocol fees, Balancer pool fees, and incentives.Contango V3Announced on October 20, Contango V3 introduced a new mechanism for onchain price discovery: Continuous Double Dutch Auctions (CDDA). This system replaces traditional limit order books, addressing latency arbitrage and stale quote sniping issues. CDDA allows orders to be placed with a defined price range and duration, accommodating a network's transaction throughput constraints while supporting a larger array of trading pairs with less liquidity.The CDDA operates through two types of orders: Nominal and Tethered Dutch Auction Orders. Nominal Dutch auction orders use fixed price values set when the order is placed—a start price and an end price over a defined time period. Tethered Dutch auction orders adjust their price range based on an external reference (like an oracle) to update with market changes and stay in line with current prices.This approach is designed to work effectively whether the market operates as a follower or leading venue for price discovery while mitigating issues like toxic flow that can affect onchain liquidity.Closing SummaryIn Q4 2024, Contango launched its native token, TANGO, which reached a market cap of $5.7 million. Open interest increased to $464.5 million—a 73% quarterly rise—and Contango experienced $2.2 billion in total trading volume, primarily on Ethereum, Arbitrum, Base, and Optimism. The oTANGO mechanism, used for early users, saw 12% of its supply (22.5 million tokens) exercised, generating $1.6 million in USDC for the treasury.Contango announced V3 with a new onchain price discovery method called Continuous Double Dutch Auctions (CDDA). This system replaces traditional limit order books by using two types of Dutch auction orders: nominal orders with fixed price ranges and tethered orders that adjust based on an external reference. Contango V3 will address issues like latency arbitrage and stale quote sniping that have plagued DeFi in recent years. Its integration could set the stage for the future of trading and looping on Contango and across DeFi.