LAPOX, not another gold-pegged stablecoin
Why we set out to build a stable asset token?
Cryptoassets (i.e. crypto coins) that are not paired with any price stabilization mechanism are subject to unexpected and sometimes abrupt and violent changes in their prices. Many times, these prices changes are due to reasons that have nothing to do with the specific crypto coin.
However, as they are all driven by supply and demand (more specifically euphoria and fear), they are victims of crowd behavior. This phenomenon came to be widely reported as high volatility. Similarly, the failure of Bitcoin and other Cryptocurrencies that mimic Bitcoin’s behavior to become widely accepted by the public as well as enterprises is assigned to high volatility. “I cannot budget my business, I cannot pay my employees, I can not pay my suppliers with something that its price can go down today 5%, up tomorrow 10%, and down the day after 5%”. This is a risk, expressed in simple words from the mouths of many people that might wish to use digital currencies but have no confidence in doing so. The lack of mass adoption has also affected early investors as they have seen their investments in crypto coin shrink.
Stablecoin attempts
Recently, there have been several attempts to create Stablecoins that could hypothetically eliminate volatility.
-Some have been using algorithms that manipulate the supply of their coins by intervening and buying their coins to support the coin’s price when it is under pressure and sell them to reduce the upside when there is demand. Clearly, this approach would not be sustainable under a prolonged time of fear as the coin management mechanism would run out of money to buy back its coins.
-Some others have been using some extremely complicated and unrealistic approaches that included coins that are a mix of shares, bonds, and tokens; clearly too unfriendly for the everyday user and even questionable if they could stand the pressure with so many variables that need to be aligned perfectly.
-Others tried baskets of several things together, creating portfolios that have their own risks and require asset optimization and rebalancing, and thus incurring tonnes of expertise and costs.
-Finally, those who have stolen the limelight have been coins or tokens that pegged themselves with the USD. Sadly, a continually depreciating asset due to US inflation, losing its purchasing power and still volatile — the value of 1 USD 100 years ago is worth less than 4 cents today.
Moreover, this is a questionable peg when it comes to its long-term solidity. If history is to teach us something, this is that no USD peg survived a major crisis. Keeping in mind that we are talking about economies that have production capacities and hedge their currencies to a stronger currency (i.e. USD) as a means of monetary policy. What is the production capacity of some of those digital currencies pegged to USD? It may not be so clear.
What is LAPOX about?
To resolve volatility which is the symptom and not the cause, our team at LAPO Blockchain decided to focus on the missing link — the areas where existing Cryptocurrencies fail to address. Cryptocurrencies currently fulfill two out of the four criteria of money — they are a medium of exchange and a unit of account, but fail as a store of value and a standard of deferred payment (the ability to receive/ sent goods and services and sent/ receive payment at a later day).
We decided to address the cause and thus pegged LAPOX (code name for LAPO’s Stablecoin to be released soon) to a real-world asset — Gold.
Gold has:
- Acted as solid and safe storage of value for thousands of years
- Appreciated over time even in the worst of times (high inflation or periods of inflation)
- Protected its owner’s purchasing power from the erosion of inflation
- Been a medium of exchange
- Been a unit of account with the ability to fulfill deferred payments
LAPOX is not another gold-pegged stablecoin. Beside this underlying asset that supports and provide value to the currency, LAPOX has a unique stabilization mechanism that allows it to capture volatility, convert it to value, store it and preserve it.
We will release the LAPOX’s Whitepaper and much more information about this new generation cryptocurrency soon. If you do not want to miss it, REGISTER HERE and we will keep you updated.
LAPOX token’s goal is to become the reserve token for the Cryptocurrency world and an attractive asset token for individuals as well as institutional investors, everyday users, and enterprises.
Paving the way to adoption
LAPOX is the stablecoin of the LAPO ecosystem, a digital banking alternative based on Blockchain technology that provides accessible and cost-effective financial services such as global debit card, real-time payment mechanism, wallet-to-wallet exchange and much more.
LAPO ecosystem aims to facilitate the widespread adoption of cryptocurrencies and foster financial inclusion. We focus on User Experience and thus our products are easy to use even for those who are not tech savvy. Our ecosystem is a flexible alternative between traditional banking and the crypto financial world.
The LAPO ecosystem has its own utility token called LAX, which acts as the key to access all our products and services. LAX will soon be listed in the first exchange.
Written by Athanasios Ladopoulos, Chief Investment Officer of LAPO Blockchain.
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