Smart Contracts are open source, are pieces of code built by others and sit on a public blockchain. To build confidence you may read the tweets, discord, blog posts or even try to read the code. However, even the smartest and most diligent of individuals cannot identify every loophole or forecast every rug pull. This balance of confidence building and implicit trust is what compels us to support new projects, thereby making money, yet we must still protect ourselves against extreme volatility.
Rug pulls are an example of a high volatility and high impact event that everyone from retail to sophisticated crypto investors need to be familiar with and aware of. In fact this type of volatile event often causes individuals to drag their feet on otherwise high return and possibly safe plays. Pharo is here to solve that problem and give you the confidence and protection you need when making decisions about crypto, and eventually non-crypto, that expose you to volatility and ultimately a financial risk.
Pharo provides liquidity for volatile events using the wisdom of crowds and statistical models to build consensus about the odds of an event, such as a rug pull. The collective liquidity providers share the risk, and the associate service fees, based on their unique perspective while the coverage buyers purchase protection from the pool. To calculate services fees Pharo transforms those unique perspectives into a risk index which is used to maintain a sustainable market.
As time progresses towards an event, Pharo will use service fees to provide coverage and rebalance with new odds data, which means:
- Lead investors can recover most of their investment.
- Gap investors at least have water they can dip their toe in.
- Early investors can be more judicious with their investments.
- Bandwagon investors know people have put their money where their mouth is.
- Fearful investors and crypto pundits will have popular talking points.
We want to hear from you — which markets do you feel need associated protection?
