LBChain – Analysis

This page concerns the use of blockchain in the Deriveum Project, our business model, and competitive advantages.

 

For more information concerning the detailed description of the problem, the solution we offer and the market opportunity please visit the corresponding sections of this website.

 

The Deriveum token has been specially designed to solve the problem of uncertainty in the Credit Default Swap market. Currently, it is a game for the very large players, which have implicit (or sometimes explicit) government guarantees. Due to their size second and third tier financial institutions, especially in developing markets, are pushed out from the very lucrative market.

 

Deriveum is new class of collateral that settles clearly outside of the local resolution mechanisms and across borders, which makes it especially suitable for economies that have weak institutions. By allowing trust to be restored in CDS contracts by local financial institutions in the global reserve currency (USD) the Deriveum provides for a decisive competitive advantage for those financial institutions.

 

At the end of the day, a corporate in developing world would issue debt and its bank will be able to make a much better assessment of risk than external investors. So if the external investors are offered binding USD denominated CDS by the issuer’s bank the interest rate for the corporate will get down considerably; this, in turn, will create more sustainable and robust growth in the economy.

 

Please also check the PSM and Tokenomics sections on this website to acquaint yourself with the provisions we have envisioned to ensure liquidity and price fix of the Deriveum token.

You may also be interested in looking at the detailed description of our business model and user’s base by clicking on the file below

On the right, you may also see an example of a corporate bond backed by Deriveum.

In it it is clear that everyone has a clear monetary incentive to enter in the deal:

The bond investor will receive a much higher return than the AAA-rated reference bond, while the risk will be reasonably shared;

The CDS insurer will receive a much higher return, than any comparative financing costs.

Naturally, the parties may negotiate between themselves different term, but the trust Deriveum would create will facilitate the trade; something that is currently not the case (Please check the Bank of International Settlement (BIS) statistics for more information on the CDS market dynamics in the last decade).

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