Created to raise financing for an innovative fusion between crypto and modern finance
The recent regulatory reform (2014-2016) made considerable changes to risks transfer through financial derivatives. The derivative holders (the people who paid the insurance premium to move the risk to someone else) used to have privileged position in the counterparty resolution. This is no longer the case.
The chart on the left demonstrates a hypothetical resolution. In both cases each group – derivative holders, depositors and bond holders are owned 50 bn. each. In both cases the counterparty has only 70 bn. in assets to cover its liabilities. As evident the derivative holders are the big losers from this change.
The Anti-derivative token gets their privileged place back. It is a special class of collateral that executes automatically outside of the resolution mechanism. By using it the derivative holders will ensure that they will be paid in case of the counterparty failure. The counterparty will need to move the collateral outside of its balance sheet only in a credit event scenario.