Cedex, the blockchain-based diamond exchange, has decided to launch an ETF.
To do this, it has secured a liquid base of 50 million dollars in diamonds, corresponding to about 6000 precious stones. This will allow investors to have an attractive guaranteed base on which to build their own contracts, including the first diamond ETFs currently under examination.
The company started out with a funding base of over $20 million in March 2018, which was raised in order to develop a platform that would allow the exchange of representative digital certificates on diamonds.
The platform was launched at a beta level in November 2018 and, by combining the blockchain with proprietary algorithms, has allowed the implementation of a solution that combines traceability and security of exchanges, overcoming the problems that until now have held back the emergence of this type of markets.
Currently, the company is developing an ETF model to be able to offer its clients the basis for this type of trading linked to goods.
Each diamond has different physical characteristics from the point of view of colour, quality, purity and size and this has different characteristics of marketability: while more general diamonds have a more stable price, others, such as coloured diamonds, have much greater volatility.
This may allow the investor to diversify their portfolio and thus take on more or less aggressive positions depending on the forecasts and propensity of the individual investor.
Cedex CEO, as the press release explains, is an expert in studying the functioning of the market, having worked in top positions at both Barclays and Lehman Brothers.
The Cedex exchange system is based on an ad hoc score, the DEX score, which summarises the gemological characteristics of the stone and therefore the possible liquidity, all based on a 20-year database containing trading data.
Saar Levi, CEO of Cedex, said:
“The vast inventory available combined with CEDEX unique technology opens up for traditional and digital markets the opportunity to develop financial instruments that will initially create the liquidity needed to jumpstart our vision – transforming diamonds into a new asset class”.