Commodities trading made easy thanks to Mettalex’s decentralized platform
Jul 23, 2020
Barriers to entry in the sometimes complex and often opaque world of commodity trading may soon be lowered thanks to Mettalex’s innovative platform that promises to deliver a low-cost, low-risk and easy-to-use solution.
Mettalex, which is powered by Fetch.ai’s decentralized infrastructure, is in the final stages of testing ahead of a planned launch later this summer. Its simple two-token solution, one short and one long, significantly reduces the barriers to entry, both in terms of cost and complexity, to help many more people gain access to the trillion dollar commodities market.
“The Mettalex solution is really exciting because it harnesses cutting edge technology to provide an easy-to-understand trading tool with minimal barriers to entry,” said Mettalex director Phillip Price.
“Many potential market participants are looking for an easy and effective way to generate long or short exposure to commodities. This is an elegant solution to that problem.”
The simplicity of the system means that the initial collateral required to begin trading is as little as $50 while narrowing the trading focus around long and short tokens will help concentrate and maximise liquidity for each commodity.
Although the initial products offered will be metals-related, Mettalex will be integrated with a vast array of market data sources and indices. As a result, participants will be able to create their own tradeable differentials between a whole range of commodities, making it an ideal tool for physical as well as financial players. A closed beta period is underway with traders from various commodity markets testing the product ahead of a wider roll-out.
Users have the opportunity to generate their own liquidity by creating more tokens, which can be used to mitigate exposure to risk or create an exposure to certain commodity assets, without a counterparty risk. It therefore offers the potential for scalable liquidity to be brought to sectors of the commodities market that have either been thinly-traded or inaccessible to the vast majority.
The technology underpinning the platform provides an autonomous market maker that can swiftly match up trades while the distributed ledger removes the need for any third-party involvement. This decentralized model also helps keep transaction fees to a minimum.
With no expiry date or delivery associated with the tokens, the need for market participants to engage in complex rolling of positions or carry trades is eliminated. Mettalex’s cap and floor trading bracket also gives entrants in this new market the confidence to trade, safe in the knowledge that any potential losses will be limited to the initial acquisition cost of the tokens.
Mettalex is the latest example of the work Fetch.ai is doing to create smart decentralized solutions to everyday problems. The Cambridge-based company is at the forefront of advances in both artificial intelligence and blockchain technology and by bringing these two previously separate technologies together, it has developed innovative models in sectors ranging from mobility through to supply chains.