Abhishek Singh on synthetic commodities trading in crypto

0:00i'm ashton addison from block west capital for investmentpitch media in the crypto coin show and today on blockchain interviews we have abby scheck singh ceo of comdex abhishek welcome to the show and thank you so much for taking the time to come on ashan hey everyone uh thanks thanks for taking the time you're very welcome let's dive straight into the world of blockchain but more

0:25specifically commodities synthetic assets the real world combining into the innovations of blockchain and how that's going to affect real world trade moving forward it's just such a large industry of commodities and to tokenize all of that is super exciting so let's start off our conversation abishek with an overview from you of comdex what are the solutions your team

0:50is bringing to the space and then we'll dive into the details um got it so uh comdx you know we had a you know very straight mission of you know democratizing finance especially in the commodity space uh the aim was to bridge uh decentralized finance with the traditional finance and uh you know we we've been around from 2018 uh trying to build solutions both for

1:15you know physical commodity trades as well as now with the synthetics protocol uh you know creating a platform for people just to take exposure and you know from more of a speculative nature so we started our journey we you know we had uh um smes and msmes you know in the asia pacific region who do cross-border trading of commodities uh commodities like palm oil soybean and with

1:43cross-closer trading you know there's a huge lack of trust between these organizations and uh it's a very tedious process to you know get settlement done um you know and naturally since uh you know everything is stressful it's such an old industry but it still relies a lot on paper uh you know to prove documents uh heavy documents around and this is where we started we started

2:07with uh tokenizing uh bills of lading uh a bill of lading is you know a document which uh you know when you are transporting something on a cargo ship you get a bill of waiting to take delivery and with that you know so basically in general supply chain lacks a lot of liquidity and these traders uh you know who are exporters and importers they add liquidity to the supply chain

2:29by you know trading before the end buyer can actually pay out so we're trying to build a platform for them where you know it becomes you tokenize the commodity which is being you know transported and on the enterprise trading platform you know it changes hands between these multiple smes in the world uh until it reaches the other port so this was more of a very uh b2b solution

2:54where we had 18 enterprises onboarded and you know we saw over 160 million worth of trade uh workflows which were you know put on our platform uh but of course post forward we realized you know these these uh organizations themselves need a lot of financing and in the crypto space you know uh any any protocol synthetics protocol that you see it's mostly you know

3:19getting assets from the other ecosystem and not um and maybe only gold silver and oil uh to be traded so we wanted you know the general crypto community to be able to access this world of commodities because and why commodities right because commodities is the most inflation resistant asset that you can hold you know and even the recent geopolitical tension

3:44is kind of proved that you know in times of turmoil that is the asset class you want to be in of course you can like convert into stable tokens but if you want to like see what what you know righteous rises perpetually during such times as always commodities so we wanted to give you know the retail users a chance to take exposure to these commodities

4:04and this is why we came up with the synthetics protocol so that people can just trade in synthetic gold oil silver and you know as more price oracles get developed which have more price fees we will get in more uh more number of commodities uh you know on our platform great intro abishak thank you for that and yeah it's like trying to build a technology that is trying to catch up

4:30from thousands and thousands of years of trading commodities on paper uh to now having it all on the blockchain and and i'm guessing it's not as easy as you know spending three months just building a quick platform and all of a sudden thousands of years of problems have been solved um it is quite an intricate uh it's very intricate so maybe you could

4:51talk a little bit about that process how do you start approaching uh thousands of years problem in commodities with technology how long has your team been working on this i mean that's uh that's uh you know kind of such a true statement because if you look at the commodity world you know you'll find of course the bigger companies and commodities you know

5:14they've they've been able to get uh you know good software development they've they've been part of the web 2 journey as well like you you want to call it they have good platforms but if you look at the smaller traders and the thing is uh in commodities though i mean the smes we deal with each of them do over a billion dollars in turnover yearly and

5:33they're still considered very small so these people like kind of you know excel is their technology platform so they're not even used to uh you know get something uh you know pass through a software uh you know because most of their uh you know work was always done using paper documentation that they have to actually store for years uh you know together for compliance now

5:57we wanted to you know make that jump directly to web3 where you know they are now able to visualize uh you know the the shipment and in terms of tokens and that has been like uh you know uh let's say a long journey to you know get these people up to trade uh up to speed with how to you know use the platform you know what is a seed and you know getting getting them up to speed then

6:24another another thing is you know whenever you're uh approaching a problem which touches and has any touch point with the real world then obviously you know it becomes a little bit more tricky when you know but with the b2b platform we had you know kycml checks of all these people done and when you're doing it cross-country then you have to take care of

6:44both the jurisdictions from where the shipment is going as well as you know the person on the other side who's taking it because uh the internet but luckily international laws etc are like pretty clear around trading so uh you know the local laws uh uh aren't as uh because it's uh when the commodity is being traded it's on international borders at that point so uh

7:08those are uh you know a lot of things that we had to learn from uh from so we were uh we had traders from hong kong singapore malaysia and dubai and you know so these are the only things like we could like uh on board so we certainly want to do uh you know get get a lot of traders on board it from different countries but it's it's certainly a slow process so from 2018

7:30till like 2020 uh you know we had two iterations of the platform built but then not not enough trades by then because we were just trying to learn from their processes and one other thing is that the trading itself of of these people it's not a standardized process because each of these traders they deal with separate banks which have you know separate

7:53requirements that they are used to and they have their own set of documents and these documents internally are not a standardized document so what we were also trying to push and then in the version that will be launched later this year we are trying to you know tell them that you know these are the five things that your contract is actually solving

8:11for you so we will just standardize that process at least on our platform so it so we can give a uniform experience to all our users so these are you know one of a few tricky points uh from a tech perspective uh you know we had challenges but that's like very common to every tech project so what it wouldn't uh go there and we built on the cosmos uh sdk

8:34uh we were always early you know adopters of cosmos and uh the community has been uh very uh great and supportive of our endeavors till date so and and since we were creating nfts of real world assets it has a lot of data that you need to put in to uniquely identify your shipment and uh you know obviously those days now of course there are many other

8:57ecosystems where you can do it uh you know without paying a lot of gas but uh those days uh you know we chose cosmos for uh as identified that as the best uh you know blockchain to build on very cool and thanks for mentioning that and yeah i feel like developing a blockchain platform for international trade is like trading in international waters you know because you have to

9:21deal with different governments and different regulations from different countries uh and and blockchain is supposed to be global and universal so i'm really excited to see how that plays out on cosmos and you mentioned at the beginning that there's you know there's multiple arms to to this where you're solving the problems of traditional commodities exchanges but

9:44you're also getting cryptocurrency traders and just more liquidity and more exposure for commodities through technology and i want to touch on that part a little bit more um you know in the same way that uh derivatives and synthetic assets are coming out uh in different ways to trade them uh in the cryptocurrency world the commodities are also available on for trading and maybe

10:05you can talk a little bit about how cryptocurrency traders that normally trade bitcoin or ethereum or maybe they do do other margining or derivatives how can they also get involved with the commodities side uh exactly we realized you know what what we were creating was a very generic protocol uh basically in in a financial term which is called the cdp a

10:28collateralized position where you know you lock up you over collateralize uh and mint basically and then you know if if price fluctuates the collateral is sold off to you know cover the position so this this is the logic you basically you know you see it getting applied in multiple multiple places but since we were in the commodity space you know we

10:50wanted this uh ability for you know retail users to exist as well uh we see multiple platforms like you know snx on ethereum uh we saw a mirror protocol on uh terra uh which which kind of tried to do this in a similar fashion if you look at maker dao make it out is essentially just uh minting the dye with it has collateral light so on on the cosmos ecosystem we wanted to make a very

11:14generic platform as well where you can lock up atom uh basically and you know mint uh commodity synthetics you can mint anything that has a price feed coming in so for our price fees we are using band protocol as our oracle and whatever price feed exists on you know that protocol i mean chain link does something similar i mean for people uh who don't know bands it is like the

11:42chain link of the cosmos equal system so it just for whatever price feeds you have you can actually create a synthetic as long as you are over collateralizing it with a cosmos ecosystem assets and obviously you know in the future when it becomes more of a multi-chain world we will try to integrate with uh you know a lot more ecosystems our ethereum bridges

12:03are already live uh you know we are test testing it uh with small transactions right now so that we can bring in liquidity from other ecosystems you know into cosmos as well incredible and i feel like there's so there's still so much to do because very little people that i know are actually trading commodities uh as opposed to just spot trading or or a little bit of margining

12:29in cryptocurrencies um and i do like that uh locking up adam with the collateralization um i think you you definitely need a underlying foundational knowledge of that you know don't just go collateralizing anything large amounts on your first trade um but it is great to have options to be able to do that especially in commodities as you mentioned with the

12:54political turmoil going on right now commodities have been more in the limelight and some of them seem to continue to rise so there's definitely opportunities there now i also saw that there is a comdex token as well and i'd love to just know in general if there's a specific purpose inside of the platform whether it's you need to use that for collateralization or it's

13:21more for governance governance maybe you can talk a little bit about that and how it fits in and provides value to everyone in the ecosystem so so two things just to you know tell you uh to to answer the point where you said you know a lot of very few people actually trade commodities and this this is what we have like like an education program or also that like we're trading for people

13:45so that they realize the inherent value of just holding that commodity and we want to be like the one spreading uh you know awareness about why this is a great asset class and uh and come on context was actually meant commodity decentralized exchange when we started so that so we always want to like promote uh you know people to just get into this and just see you know

14:06historically how this asset class in general has performed so uh coming to the cmdx token uh our main radar is live uh you know but the application is like slowly coming out uh it's it's going to have its test net hopefully uh before much ends uh you know we're just uh finishing out some last details uh it's or the code is public though it was always open source

14:29from day one so you can see uh you know how the development has come about but uh talking more about the token we did a you know fair launch on osmosis so osmosis is the decks of the cosmos ecosystem and uh you know and this way we had a you know very good community support uh from people uh what is it used for so in in cosmos it's an app chain model so

14:55every every app can have its own separate chain so we operate like a layer one protocol where we are creating these modules which can be used for different financial products uh so it's not just limited to synthetics or you know the commodity trading app that we built the protocol is built in a very generic fashion uh using the cosmos sdk so we have the

15:17proof of stake network and we have 75 validators currently where you know which which help maintain the network so the cmdx token is the utility token of the of the chain which is used for uh you know staking and uh and like in every cosmos based chain there is uh there is governance so all stake tokens and we are like a heavily community driven uh you know project as well and uh

15:43whatever you know uh most of the decisions like uh we you know put it out as proposals on our chain and uh stakers can actually uh you know vote on those proposals so it's used for uh you know voting uh in what what the water decks needs is basically liquidity right so we would be pairing whatever synthetic assets we have with the cmdx token itself because i also

16:10will have to like get in but you know just to create the market we'll have to buy usdt or something like that so just to avoid that we'll just pair it with our own token uh you know so that the synthetics actually get a good liquidity and there is less slippage for traders and yeah and then of course it like a cruise fees you have to pay gas and cmdx um in

16:32the future when you know the token has more uh uh you know across different exchanges on decks etc both that is when we would want to like use that as collateral itself because if you use you know something as collateral which doesn't have a lot of liquidity uh it's not helpful either way because you know the token price can fluctuate so we want to start with uh you know big

16:56assets like atom osmosis uh you know luna ust uh that that have huge liquidity across exchanges you know which can actually take that liquidation whenever you know that happens very cool thank you for all of that and i completely agree with you about the liquidity um for the viewers that are looking to get involved learn more about commodities as you mentioned education

17:21and start utilizing comdex on the platform what is the best way for them to learn more and to get involved the best way would be just to use comdex.one uh you know just to go around the website and inside the website you will see uh you know links to our github uh our telegram and our twitter our telegram we have a very active community so you know if you have questions uh or

17:46anything you you can just shout out uh join the group and you know shoot your questions and you know the community itself a lot of people keep answering questions so it's not just the team and if you're looking to get involved in a more technical nature uh you know there's a discord link there as well so you know what would appreciate any uh any open source contributors or if you

18:06can contribute to in any way towards complex so you know please come and build with us great thank you so much abhishek i will leave those social links and comdex one in the description box below all the best with everything commodities moving forward and let's follow up in the near future thank you ashland appreciate it