Ever wanted to yield farm gold, silver or oil?
Fetch.ai is launching Mettalex, a decentralized exchange that allows its users to trade commodity and crypto derivatives. The users will be able to gain exposure to traditional crypto trading pairs as well as commodities like gold, silver, cobalt, oil, and even the stock market indices.
Humayun Sheikh, who serves as CEO to both projects, told Cointelegraph that in addition to providing exposure to new investment products for the crypto community, it presents three main competitive advantages to commodity traders:
“One very key advantage for them is that they can build the market and they can bring the market to people. So second, of course, the costs are much lower. [...] And really the third benefit is the way you can actually operate these instruments. For them to have these instruments, they will have to hedge their risk in two or three different places. What this enables them to do is just bring it into one instrument so the margin costs are low.”
Sheikh said that the costs are kept down by using Fetch as a sidechain. He also stated that Mettalex has already secured commitments from around 30 commodities traders:
“I think it's around 30 traders at the moment who are initially going to be jumping. And these each trader is probably trading in the region of around one hundred million a year.”
According to the CEO, the need for posting a collator in cryptocurrency should not present a real challenge to the users who come from the traditional world. He believes that many are comfortable with crypto and that the company will provide an easy to use interface.
Those who will be creating markets on Mettalex will have to provide collateral in the form of stablecoins, which will be converted into the native token MTLX. Since the project is intended to be decentralized, the token will be used for both liquidity pools and governance.
The already heated DeFi space may get a new and unique playground with Mettalex.