Risk management is an essential part of the financial world. The popularity of insurance, futures, options and forecast services proves the high demand for the risk management system. However, these financial derivatives are far from being perfect. The lack of flexibility, ineffective contract execution and high cost of trading varieties are the obvious problems. What is more, the whole OTC financial derivatives market is far from being transparent and credible. Blockchain has the potential to transfer the best financial solutions to a progressive technological platform that solves these issues.
ValPromise is working at the intersection of finance and blockchain. This company has developed a distributed value promise protocol used for its blockchain-based release and trading system. ValPromise believes that the blockchain-based approach to risk management can eliminate the multi-variety and cross-region issues.
The idea behind ValPromise ecosystem is the development of a transparent finance protocol-like exchange. This approach can significantly change the trading mechanism of all financial contracts related with public indicators. The existing system includes two main parties: issuers and traders. At the moment they have to use the services of a third party for most of the deals. The blockchain-based solution developed by ValPromise gets to the new level of transparency, security and efficiency which means that the third party is no longer needed. That approach not only makes the contract execution more convenient but significantly lowers its costs.
ValPromise has also taken care of the risk of default which is a big deal for the centralized financial products. The solution developed by the company is elegant: the process of establishing the contract includes locking down the corresponding amount of VPP tokens. Then the smart contract technology will make all the decisions automatically eliminating the possible risks – and the whole process does not require the endorsement of a third party.
The smart contract technology implemented by ValPromise deserves a special note as the company has done its best to make it user-friendly. The most popular contracts will be turned into fixed simple-to-use templates that can be customized.
The ValPromise ecosystem is still in development, but its first business project is already available to the public. The company has created Tianqibao – a decentralized application which provides weather risk hedging and insurance services through contracts. This DApp is already used by a number of influential Internet giants like Didi, Qunar and Moji Weather. The popularity of the app starts to grow: 200,000 weather insurance contracts have been issued during the last half a year.
Tianqibao is the first project of ValPromise, but the company is not going to stop here. The successful launch of the first DApp has proved the efficiency of the ValPromise ecosystem. Weather index insurance was a great issue to start, but the company has the potential to bring to the new level other financial derivatives like forecast contract, FX index options, OTC Forex futures & options and even precious metal futures & options.