The Comdex (Commodities Dex) Trading Platform is a Tendermint-based decentralized commodity trading platform. Through the ‘Comdex Trading Platform,’ market participants from all around the world will be able to benefit from easily accessible commodity synthetics for the first time in history.
The traditional commodity speculating sector has a number of serious flaws, which this platform will confront head-on.
Lack of Global Market Accessibility
Individuals are unable to participate in mainstream derivative products that reflect assets with intrinsic value due to cross-border liquidity constraints and regulatory-related eligibility limits.
Due to the perishable nature of agricultural commodities, most have a storage life of only three quarters. As a result, traditional speculators are unable to profit from longer-term price increases by accumulating the commodities in question.
Physical Storage Risks
Storage of commodities possesses a tremendous risk of unpredictable negative externalities. Dependence on centralized warehouses, to safeguard and protect the value of commodity consignments, opens doors to risks of damage from physical disasters and pests. There also is a high risk of fraud involved through the documentation of consignments.
Commodity-related futures contracts are expiration based, which forces speculators taking long-term positions to exit their positions before expiry and re-enter upon the establishment of a new contract. This can lead to capital depreciation from premium prices that the next contract may open as compared with the closing price of the previous contract
How COMDEX Works
Cosmos, a framework focused on crypto asset interoperability, underpins the Comdex Commodity Synthetics platform.
On the platform, ‘cAsset’ tokens are issued to represent commodity synthetics. Each commodity offered on the platform has its own unique ‘cAsset’ token; however, because these tokens reflect a single continuous futures contract, there is only one tradeable cAsset token per unique commodity.
Users can create assets on the platform in two ways.
Genesis Liquidity Provision
White-listed ‘Market Maker’ businesses establish the initial liquidity of cAssets on the platform. The Market Maker creates a specified quantity of cAsset to start a new cAsset trading contract, and ten effectively hedges against the short position’s possible fall by buying futures longs on controlled exchanges.
When they create cAsset tokens on the platform, ‘short traders’ effectively take a short position on them. The user must submit an over-collateralized USD denominated stablecoin deposit to mint a cAsset, which effectively functions as the margin for the position. If the short position’s loss pushes it to approach its liquidation threshold, this’margin’ amount may need to be re-collateralized.
The automated market maker module on Comdex’s synthetic trading platform provides speculators with a seamless liquidity solution. The automated market maker essentially provides liquidity in the form of both ‘cAssets’ and ‘Stablecoins,’ and is funded by liquidity providers who hope to profit from both trading fees and liquidity mining incentives in the form of the native CMDX token.
The size of liquidity mining rewards in the form of the CMDX token is proportional to the amount of accessible liquidity on the platform as well as the volume of current trades. The bigger the ratio between a cAsset’s trade volume and its underlying aggregate liquidity, the higher the CMDX token incentive provided to the cAsset’s AMM’s liquidity providers.
The oracle price feed for Comdex’s commodity-related synthetics products is critical since it establishes the contract’s “fair value” mark price and imposes liquidation measures on participating “Short Traders.”
The Comdex synthetics platform is supported by Oracles with real-time data fees linked to the CBOT and CME exchanges’ powerful API servers, which have very liquid commodities trading contracts.
Comdex intends to provide a solution that allows common investors around the world to have seamless access to a restricted asset class with intrinsic value by combining all of the above elements. We want to achieve our primary aims of democratizing commodities and linking DeFi and CeFi by developing solutions like ShipFi and Comdex Trading.
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