Nobel Prize

in Economic Sciences

1997

The Brightpool business model is based on the cryptocurrency-adjusted Black-Scholes model for derivatives pricing.

The original model was awarded the Nobel prize in Economic Sciences in 1997 and to this day the largest investment banks in the world rely on its iterations.

the

power

of

consistency

The Black⁠–⁠Scholes model was constructed as a so⁠–⁠called zero⁠–⁠sum game.

This means that if we consistently price user orders and pay for them according to the model, and then consistently settle the orders according to calculated price and settlement time, the long-term outcome will be zero – neither earning, nor losing (the value of paid rewards will be equal to the total income).

Our platform earns in the currency of the order, but pays in the BRI token which is minted only when orders are placed. The value of placed orders creates in turn a fundamental value for BRI tokens. In the long term BP’s revenue equals the value of all placed orders. It means that BRI should be valued by the market according to the Black-Scholes model – as it will correspond to the cumulative value in the pool. It also allows Brightpool to incentivize stakers with the tokens traded on Brightpool such as WETH, USDT, USDC.

price engine image

Price engine

01
Black–Scholes Model
Our price engine utilizes a modified version of the Nobel-prize winning Black-Scholes model, which mathematically adjusts for and predicts volatility change.
02
Volatility Algorithm
Our machine learning algorithm accurately compensates for dynamic volatility changes in the market.

The price engine is comprised of these two components (volatility algorithm & Black–Scholes model) and when combined, they are used to calculate the value of each order reward on our exchange.