Mettalex, a spinoff project of Fetch.ai, announced Friday that it has officially launched a decentralized exchange for commodities trading, offering another compelling use case in how blockchain technology is disrupting traditional finance.
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. 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.
Initially, the exchange will provide access to several commodities, including lithium carbonate, steel recyclables, zinc, iron ore, natural gas and BTC/gold spreads.
In debuting the platform, Mettalex also announced Javelin Global Commodities, a trading firm of thermal coal and other commodities, as its first customer.
Mettalex is accessible to anyone 24 hours per day, 365 days per year. When asked how it can reconcile round-the-clock trading with the defined schedule of major commodities exchanges like the Intercontinental Exchange and the New York Mercantile Exchange, the company told Cointelegraph that it remains open “based on the last reported price while real-world markets are closed.”
The company explained:
“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.”
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. “Initially, we don’t expect to allow U.S. participants,” the firm said.
On the topic of decentralization, representatives of the firm explained that this means “no counterparty and no single point of control.”
Decentralized exchanges have become one of the hottest decentralized finance growth stories of the past year. More than $53 billion is currently locked into DeFi, with DEXes accounting for a large portion of the total.
Fetch.ai CEO Humayun Sheikh believes incorporating commodities into decentralized exchanges will enhance the transparency of pricing data. “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,” he said.