What is APO Finance?
What is the fundamental problem that APO is solving?
Today there is no way to short Bitcoin or any other crypto-currency. The APO platform provides a platform for buying options on crypto-currencies, both long and short! The fact is that cryptocurrencies do not correlate with one other and are not tied to fiat money. Therefore, it is impossible to make a tool for selling short similar to what currently exists on the market. Every attempt to create options and futures for crypto-currencies on centralized exchanges led to high collateral for futures (80-100% of the price of the crypto-currency itself), or very high premiums for options which render these instruments impractical. The root cause of these problems is the fact that sellers (those who write options) cannot hedge their risk.
Why is solving this problem so important?
Lack of instruments such as options and futures makes the market extremely vulnerable to fluctuations, (based on news or market manipulation) because participants have no way to hedge against falling prices. The crypto-currency market is what’s called “an incomplete market” – for us it was of high interest to solve this type of problem and create a tool that does not violate the principles of the crypto-currency community.
Who benefits from this solution?
The addition of a derivative crypto-currency instrument with a guarantee of payment on expiration date benefits all participants. For example:
Miners can insure against the risk of depreciation in order to maintain profitability;
Individual traders can use options to speculate on falling, as well as rising, prices;
Companies conducting ICOs can protect the cryptocurrency value raised during the ICO so that;
it will not be diminished by price fluctuation when they need to convert it to fiat money.
How is this solution unique?
This is a unique tool developed by the team conducting the ICO
Part of a blockchain network in the form of smart contracts
There is no need for option sellers
Does not require collateral
What does it mean for the cryptocurrency market?
The creation of derivative instruments is a huge step forward for the crypto- currency market. They affect the nature of the market itself, providing stability and help further growth.