Mettalex, a spinoff project of Fetch.ai, has launched a decentralized exchange for commodities trading, offering another compelling use-case in how blockchain technology is disrupting traditional finance.
It has been reported that the new exchange aims to disrupt the commodities market through blockchain applications and other emerging technologies, such as machine learning and the Internet of Things.
However, Mettalex has been designed to improve upon existing automated market makers and blockchain oracles. The company has said its automated market markers act as a party to all trades and ensure that the platform is fully collateralized.
The report said that initially, the exchange will provide access to several commodities, including lithium carbonate, steel recyclables, zinc, iron ore, natural gas, and BTC/gold spreads.
Also, Mettalex announced Javelin Global Commodities, a trading firm of thermal coal and other commodities, as its first customer.
The company said:
“The prices of long/short positions on Mettalex during that time could still vary depending on user sentiment, but only the oracle-reported price can settle a market.”
Likewise, Mettalex also clarified that its markets are based on oracle-reported data from spot and futures markets and that it doesn’t offer physically settled commodities. When asked about the regulatory implications of its platform, particularly in the United States, Mettalex said it acts on the legal advice of its attorneys.
The firm added:
“Initially, we don’t expect to allow U.S. participants.”
Humayun Sheikh, the CEO of Fetch.ai, believes incorporating commodities into decentralized exchanges will enhance the transparency of pricing data.
Thus, he said:
“By making this type of market intelligence and the ability to trade more readily accessible, Mettalex aims to bring one of the oldest forms of trade in human history into the present century.”