A fully collateralized DeFi lending platform has announced that it is planning to launch on Binance Smart Chain this month.
Apollo Protocol says its aim is to mitigate the risk of volatility in the crypto markets — something that often deters financial institutions and retail investors from entering the space. The project pointed to the dot-com bubble of the 1990s, when many companies were regarded as too risky to invest in. Fast forward to 2020, and some of these firms have become household names and blue-chip stock options.
The platform aims to create an environment where growth and stability are optimized, and has developed three tokens that will bring this vision to life.
AOX is pegged to a weighted basket of diverse assets — including the U.S. dollar, Chinese yuan, British pound, Indian rupee and commodities such as crude oil, gold, coffee and wheat. It’s designed to appeal to day-to-day investors and traders. The GDPs of the wealthiest seven countries are also tracked.
A recent blog post explained: “This diversity allows for our peg to more accurately reflect current global wealth. Therefore, even if certain nations, metals, or currencies are inflated or suffer an unforeseen disruption, there is balance.”
This will be complemented by AOY, a “perfectly stable” token that’s designed to remain at a fixed value of $1, which will be used as collateral for an upcoming DeFi lending platform. Last but not least, AOZ will act as an intermediary for growth within the ecosystem.
In a white paper, the Apollo team explained: “Current stablecoins are either overly synthetic and undercollateralized or overcollateralized and new models of algorithmic stablecoins (algo-stablecoins) such as rebase and seigniorage models are too volatile. Apollo has created the third generation of algo-stablecoins that achieves ‘true seigniorage’ by allowing volatility and stability to be decoupled but linked.”
Taking on competitors
Apollo Protocol has set its sights on taking on the likes of Tether, USDC and DAI. The team behind this project say their goal has been to combine the best part of all these models — resulting in an “ideal digital currency that is both futureproof and innovative.” They added: “It is a native digital currency, created from the blockchain out, rather than trying to shoehorn legacy systems into the blockchain space.”
Binance Smart Chain has become increasingly popular among DeFi protocols because of how it can handle greater numbers of transactions at lower costs.
Apollo’s goal is to ensure that growth and stability can both shine without compromise — and says a common downside with many second-generation stablecoins lies in how both of these attributes are compromised by being combined into the same token. “By separating these functions into two unique tokens that are connected by a third token, we allow them to co-exist while being individually maximized,” the team added.
Among Apollo’s supporters is TrustSwap CEO Jeff Kirdeikis. He praised the protocol’s approach, tweeting: “Crypto needs more reliable stablecoins that aren't pegged to fiat currencies that are in a death plunge of depreciating value. We need stablecoins that are pegged to assets with stable metrics that hold value, such as GDP and commodity indexes.”
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