Financial Infrastructure for the Crypto Economy : Financial Derivatives in the Blockchain

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What is Firmo?

Firmo is aiming to build an infrastructure for creating/executing financial contracts. Firmo will bring the key components of smart contracts such as their trustless and transparent nature, to the world of finance. Using FirmoLang, developers can build financial tools that have been previously only available to traditional, non-decentralized economy asset-classes such as derivatives.

What is a Derivative?

A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. - Investopedia

Example: A Pension fund manager is expecting to receive cash on a specific date which would be May 6. The manager can decide to enter into a contract to purchase a stock portfolio on let say May 8 at a price agreed today. By doing so, the manager's position is unaffected by any changes in the price of the stock between today and May 8. In this sense, the managers is hedged against any increase in the price of the stock until May 8. The disadvantage is that the manager is also hedged for any decrease in the price. Also the contracts must be agreed by the two parties.

Please take note that the example above is based on what I understand about Financial Derivatives.

Change the way of Transactions

Firmo also aims to change the way traders, buyers and sellers on the way they transact. Firmo is reshaping and solving financial problems like the lack of financial tools. This also ensures the quality of service of each trader that is involved with Firmo. In firmo, handshake first then a smart contract before you can transact. Firmo also aims to build and create modern financial tools for traders to easily use.

Zero Coverage is an Advantage

Firmo not only allows traders to use smart derivatives with little or no collateral. Zero Coverage is an advantage and will be used in some situations. After traders and users execute smart derivatives on a legal infrastructure, or both parties agrees with their contract. Zero coverage will be built after a smart contract.

More Secured

We already know that this type of system is more secured because of smart derivatives. In fact, FirmoLang is already designed to be more simple and more secured.

Potential Investors

Because of a secured ICO. Investors will probably invest money here and traders will also trade because of smart derivatives. Financial derivatives are also implemented on FirmoLang. Firmo is not just for investors, but traders who buys and sells to ensure the investment they risked.

Thanks for Reading, Ciao!

firmo2018

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