Turkish steel mills, including Bastug Metallurgy, and traders have joined start-up Fetch.ai to develop a decentralised, blockchain-based tokenised metals exchange.
Fetch.ai was established by Humayun Sheikh, former chairman of UK scrap merchant group Mettalis. Long-standing ferrous derivative market participants Phillip Price, Abe Ulusal and Jonathan Fish are all advisors to Fetch.
Trial transactions on the exchange begin next week, with Bastug and one of its suppliers to compete a transaction. Bastug said it will trade scrap as well as steel products on the exchange.
Transactions will be settled in tokens — not Fetch's current Fetch token — floated through an initial coin offering. The value of the tokens will fluctuate in value relative to normal, or fiat, currencies. Digitised and tokenised trading will allow more participants access to risk management tools, Fetch said.
It will also unlock "new funding models" by allowing participants to collateralise, or "tokenise", material and future production capacity. The funding will be provided through tokens, which can be exchanged for fiat currency — smart contracts will allow participants to pledge title to their stock and receive funding in return.
The exchange will also allow participants to hedge steel spreads, which Fetch.ai will elaborate on at a later date.
Fetch.ai's platform will also allow real time analysis and monitoring of material and electronic shipping documents and live monitoring of movements.
