[ANN] APO - Advanced Parimutuel Options on Cryptocurrency

APOFinanceAPOFinance Member Posts: 2
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.

Article about Reverse Parimutuel on MEDIUM

General description
The APO platform allows participants to trade derivative instruments (options) without collateral and without risk of non-payment, unlike a centralized exchange.
  • The platform automatically creates a smart contract for the auction, which lasts until the expiration date, and terminates after making payments to participants
  • The platform operates without option sellers
  • APO does not act as an organizer of these auctions, but performs the functions of developing, maintaining and upgrading the source code
Over the years, crypto-currencies have proven their worth, and in the future, perhaps many of the world's financial systems will be built on top of them.
Now, the time has come for derivatives on cryptocurrencies to strengthen and stabilize the market.
The premium for such options is significantly lower than the payout in case of a win!

What do we have?
  • A mathematical model of the idea implemented in program code
  • A ready-made auction prototype - it is presented on the website as a working model for calculating premiums
  • Specialists in the field of blockchain technology and server-side programming
Video


DEMO


Tokens sale
Name: APO
Start: April 25, 2018, 10:00:00 am
End: May 23, 2018, 9:59:59 am
Acceptable currencies: ETH
Tokens exchange rate: 1 ETH = 15,000 APO
Minimum transaction amount: 0.1 ETH
Soft cap: $3mln ~ 6,000 ETH
Hard cap: $7mln ~ 14,000 ETH
Escrow: If by the end of the sale the soft cap is not reached, each and every investor will get their money back.

Token Distribution
40% - ICO
25% - Reserve (locked for 12 month)
20% - Team (locked for 12 month)
10% - Private Investors
5% - Bounty

Functions of tokens
  • To provide the financing for development and marketing of the platform
  • Gives the holder the right to receive a percentage of commission collected by the platform
Discount:
1st Week - 25% Bonus
2nd Week - 15% Bonus
3rd Week - 5% Bonus
4th Week - 0% Bonus

Projections:


Team:


Whitepaper: here
Website: apofinance.io

Comments

  • APOFinanceAPOFinance Member Posts: 2
    Reverse Parimutuel Options on Bitcoin


    Inthe previous article, we considered problems faced by centralized exchanges when creating a derivatives market for cryptocurrencies. We also proposed a solution that we developed, which we called reverse parimutuel options. Now let’s look at the practical side of trading reverse patimutuel options on Bitcoin.
    The ability to make money on fluctuations in the price of an asset is one of the inalienable components of a financial market. It can done in several ways, such as buying the asset itself, buying the asset using leverage, buying futures or options. We will consider a case of using reverse parimutuel options on Bitcoin and compare them with buying and owning actual Bitcoin.
    Assuming the reader is familiar with standard option calls and puts and read the previous article about reverse parimutuel. At the time of this writing, Bitcoin (BTC) was worth about $8,700. All calculations will be made based on this value.

    Scenario 1: Rising Market

    So, in order to purchase one BTC, we will need $8,700. If the value grows by $3,000, we will earn $3,000, if it falls by the same amount, then we will lose $3,000. What advantage does reverse parimutuel give us in this scenario?
    First, let’s calculate the value of a reverse parimutuel call with a strike price of $8,500 and an upper limit for the option at $11,500 and 3 months to expiration. The premium will consist of the total cost of all base states (ranges) from 8,500 to 11,500 inclusive.


    Reverse Parimutuel Call 8500 vs BTC

    The total cost would be $315 or 3.7% of the price of BTC. In other words, in order to earn on the growth of Bitcoin, we would only need to pay $315 and if Bitcoin grows by $3,000, we will earn $2,685 ($3,000 — $315 is the profit minus the premium paid earlier). However, in the event of a drop in price of Bitcoin, the situation becomes much more profitable when compared to simply buying Bitcoin outright. If the value drops by $3,000, we would only lose $315, which is the original cost of options (called “predetermined risk”). The second-most important advantage of using options is for the leverage effect. In order to earn on the rising price we only need to invest $315 instead of $8,500, in other words for $8,500 we can buy 26 options and earn 26 times more than buying 1 Bitcoin.

    Scenario 2: Falling Market

    As we outlined in the previous article, it is extremely difficult to create short sale on the crypto-currency market, and all attempts to implement it were taking a step back, back to the centralized exchanges. Standard options for cryptocurrencies, due to their unique qualities, carry huge premiums even though the buyer has no guarantee that the seller will pay. Therefore, in the event of a fall in the market, if you have a cryptocurrency in your portfolio, you have nothing left to do but to wait it out or sell everything at the market. Who knows when a bear market will end and the growth will begin again?
    Let’s consider a reverse parimutuel put with a strike price of $9,000, a lower limit of $6,000, expiring in 3 months and calculate its premium.


    Reverse Parimutuel Put 9000 vs BTC

    The total cost of the option premium will be $315 or 3.7% of the BTC price (exactly the same as for the call. This is because we are using the price of Bitcoin at 8,700 and the premiums for call and put options should be the same in order to exclude the possibility of arbitrage). So, if we own Bitcoin and the market falls, our portfolio will lose proportionally to the market. But, if we buy a put option for $315 and the market drops by $3,000, then we will profit by the fall of $2,685 ($3,000 — $315 or profit minus the premium paid earlier). What that means is that derivatives can function in the crypto-currency market, and this is an excellent tool for it whether trading long or short. If you add the effect of leverage, then in a falling market you can earn multiple times more than selling Bitcoin futures (due to the huge collateral now required by exchanges).
    Scenario 3: Hedging Risk for Miners and ICO
    This scenario is more suitable for companies or private investors who are engaged in crypto-currency mining, as well as for companies that conduct ICOs.
    For mining, a fall in the exchange rate directly affects profitability, and for companies conducting an ICO, the exchange rate affects financial planning.
    In both cases, buying a put option is ideal. To insure their portfolios, miners will need to buy as many put options as they plan to produce in 3 month period. As a result, this insurance will cost them 3.7%. So, if at the expiration date the exchange rate is lower, the company can compensate for the loss with the profit from the exercise of the put options (minus the premium paid). Companies conducting ICOs can choose options with a shorter term, and lock in the rate for the date the ICO begins.

    Conclusion

    Options are universal financial instruments that can be used in many scenarios and have numerous advantages, such as:

    1. Provide leverage, in our example 26 to 1
    2. Limit risk in the event of a market movement in the opposite direction
    3. Allow an investor to profit in a falling market
    4. Provide the ability to insure a portfolio against depreciation

    We want to invite you to participate in the creation of a new market based on cryptocurrency derivatives. This is another step towards changing the global financial system.
Sign In or Register to comment.