Fetch.ai partners with Turkish steelmakers to develop first AI-powered decentralized metals exchange
A group of leading Turkish steel makers and traders, including Baştuğ Metallurgy, have entered into a coalition with artificial intelligence lab Fetch.ai to help develop the world’s first decentralized, blockchain-based and AI-powered, tokenized metals exchange.
The steel mills and trading firms plan to begin trial transactions on the innovative platform next week.
“I am extremely pleased to be working with Baştuğ and the other steel mills and trading companies which are part of the consortium,” said Fetch.ai CEO Humayun Sheikh. “Having them on board is a testament to the strength of our project and will speed up our efforts in building this revolutionary marketplace. The decentralized exchange will change the way metals and other commodities are traded and funded.”
The decentralized exchange, powered by Fetch.ai technology, will integrate AI-accelerated blockchain solutions that will allow increased liquidity in the trading of steel, base metals and other commodities.
The first transaction between Bastug Metallurgy and one of its suppliers is due to take place in October. The Fetch.ai platform will enable the recording and monitoring of the transaction via an intelligent smart contract.
“We are thrilled to be part of such an innovative project,” said Emrah Ugursal, Deputy General Manager at Baştuğ. “Our company strives to be at the forefront of technological advancement and we feel that this project really has the potential to change steel and metals trading for the better by dealing with long-standing issues with new technology .”
Fetch.ai will help market participants overcome existing barriers to entry through innovative technology. It will enable and simplify digitized trading of these materials through the use of tokens, allowing more market players to gain access to exciting new risk management tools, while maintaining market efficiency and security.
The decentralized platform will also unlock new funding models for supply chain participants by allowing them to collateralize their material and production capacity, which will enable full realization of the value of the underlying commodity they are holding.
It will also allow spread hedging between raw materials and finished products in a simplified fashion which will help market players to better hedge the portion of the supply chain which is more relevant to them.
While the commodities trading market has struggled to adapt to the blockchain model mainly due to the absence of autonomous monitoring and fraud detection, the Fetch.ai platform with its machine learning (ML)/ artificial intelligence (AI) framework will help solve these issues.
In physical trading of metals, the integration of machine learning will allow real time analysis and monitoring of material quality and quantity within a trade flow. Integration of electronic shipping documents and live monitoring of shipping will further ensure fraud detection. For example, the automation of these tasks will enable insurance costs to be priced correctly and dynamically.
In the financial trading of commodity-backed tokens, the use of smart contracts will automate various exchange processes, reducing the administrative burden and costs involved in the transaction.
The Decentralized metals exchange is due to be officially launched later this year.
Glossary
Smart contract
A completely digital contract stored inside a blockchain. A smart contract allows people from anywhere in the world to transact without needing a trusted third party. Instead, pre-defined conditions are entered into a coded smart contract and when these conditions are met, the funds are automatically released. By removing the need for a third party, agreements are faster, cheaper and more efficient. Smart contracts are immutable and distributed meaning the contract can never be changed after creation and is validated by everyone on the network. This means tampering with this type of contract is almost impossible.
Blockchain technology
A Blockchain (or block chain) is a method of storing a list of entries, which cannot be changed easily after creation. This also applies to the list. This is done by using several concepts from cryptography, including digital signatures and hash functions. Blockchains are secure by design. Blockchain technology is used where keeping a correct record is important.
Emergent behavior
Emergent behavior is the behavior of a system that does not depend on its individual parts, but on their relationships to one another. Thus emergent behavior cannot be predicted by examination of a system’s individual parts. It can only be predicted, managed, or controlled by understanding the parts and their relationships. Emergent behavior is also known as emergence, emergent property, or “the whole is greater than the sum of the parts.”
Decentralized exchange
A decentralized exchange (DEX) is a cryptocurrency exchange which operates in a decentralized way, i.e., without a central authority. Decentralized exchanges allow peer-to-peer trading of cryptocurrencies.
Tokenization
The tokenization of assets refers to the process of issuing a blockchain token (specifically, a security token) that digitally represents a real tradable asset — in many ways similar to the traditional process of securitization, with a modern twist. These security tokens can then be traded on a secondary market.
