With blockchain, we don’t have to trust anyone.
After all, why do we need to pin our hopes on institutions when technology has repeatedly proven to be a reliable alternative?
After years of establishing our trust in sensitive centralized platforms, blockchain now provides an exciting and global medium where processes and tasks can be executed without intermediaries.
Blockchains are flexible and can be tailored to meet different pressing needs. Legacy networks like bitcoin lacked smart contracts. However, modern chains with smart contracting capabilities are proving to be revolutionary.
They are at the heart of tokenization, allowing the rapid digitization of valuable physical assets, subsequently opening up a floodgate of infinite possibilities, particularly in the global commodity market where platforms such as Metalex—a decentralized AMM-powered exchange of tokens -based commodity trading. The Fetch.ai blockchain, plays an important role.
The era of blockchain automation and smart contracts
In many areas, smart contracts play a major role in trading. It is also timely.
For decades, trade has been facilitated by centralized organizations. They are represented by regulated exchanges, which often allow certain traders, mainly from specific sectors, to trade and profit from the volatility of financial instruments such as stocks, indices, forex, or even commodities. give.
As evidenced by overwhelming evidence in the multi-trillion global commodity trading landscape, automation and smart contracting can provide many advantages that could open more avenues to benefit retail traders, who have been blocked from accumulating funds for years.
The power of automation is the essential equalizer, and smart contracts fit the bill. They are self-executing code running on a public blockchain and are at the heart of DeFi, NFT, gaming and tokenization, let alone changing crowdfunding, commodity trading, and more.
Yet, while revolutionary, smart contracts are not always free. They may require reliable external data to function efficiently.
By default, the independence of the underlying blockchain limits the capabilities of smart contracts as fragmentation prevents the tremendous true power of automation from being realized.
Without reliable, tamper-proof secondary data, it becomes difficult to conduct business efficiently and connect more people to trusted systems powered by smart contracts.
Why smart contracts need reputable external data
Although desirable, activating trusted smart contracts with unverified third-party data can introduce unwanted attack vectors.
Nevertheless, without a decentralized, trusted and reputable source, trading high-value commodities through a trustworthy platform will be frustrating for investors.
Nevertheless, this is a choice that still needs to be made as DeFi also has inherent vulnerabilities that were exposed by flash loans.
Decentralized token trading platforms operating in isolation without the decentralized oracle caused millions, if not billions, of losses in 2020.
The impact of Flash Loans and the failure of decentralized trading platforms to integrate reliable, decentralized and reputable value oracles forced other disaffected protocols to take measures to secure the interest of their global client base.
This reactive and preventive step was only necessary. Oracles allow blockchains to “see” each other as well as the outside world.
They promote interoperability and are important in making smart contracts a better form of protocol, acting as middleware that goes beyond offering centralized options.
Oracle collects off-chain information and reliably provides tamper-proof data to on-chain smart contracts.
The role they play as a data provider and essential interface between the blockchain and the outside world plays a vital component in DeFi.
Partnership with reputed external data providers
Uniswap and most DeFi protocols that use the Automated Maker Model (AMM) model, such as Sushi Swap and Metalex, have integrated trusted oracles such as Chainlink and DIA.
By operating on the blockchain, Metalex is accessible 24/7 and offers unique hedge tools to ensure that traders are not liquidated before the settlement date.
In addition, Metalex has partnered with S&P Global Platts – a leading global independent provider of information, analysis and benchmark prices for the commodities and energy markets.
Through S&P Global Platts, the DEX can access industrial-grade price feeds, enabling smooth, reliable commodity trading.