Business model

Business Model

Summary: The users will purchase Deriveum. All the money will be stored in US Treasury bills. When users want to convert Deriveum back to USD, we liquidate the treasuries and pay the users. The yield of the T-Bills will be our income. Additionally we will utilize fees to the users for the PSM and Hedger instruments.

There are two revenue streams – interest on the principle of the collateral and fees.

We aim to capture 0.01% of the addressable market (or $0.7 bn out of $7 trillion). We aim to reach 0.3% of the addressable market by year five of operations – or $20 bn in turnover.

The underserved market is over $7 trillion, where we will be hard capped to a maximum exposure of 1.3% or around $80 billion. In a very conservative scenario, we assume that we will reach $0.7 bn (0.01% of the addressable market) by end of operational year one. For year two our assumption is that we will grow exponentially to $4 bn turnover (0.05% of the addressable market). We expect doubling in the next year to turnover of $9 bn. Our conservative projections suggest that by year five we would reach turnover of at least $20 bn (0.3% of the addressable market).

Our business model is quite straight forward – when users buy Deriveum their money will be split equally in two funds (PSM – providing market liquidity and Hedger – providing price fix) and parked in US Treasuries. When the users leave the CDS trade their tokens will be converted back to money by the funds. While the CDS contract is active (which is typically 3 to 5 years) the US Treasuries will yield some interest – around 0.2-0.3% – which will be our revenue. Further users will take advantage of the Hedger, which prices will mirror those of the US Treasuries. Therefore, we expect annual revenue proportional to 0.4-0.6% of the turnover.


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