What advantages SoftMetal brings to metal alloy market by using Confidential Computing

Market liquidity is a crucial aspect of any asset. It describes the degree to which an asset can be quickly bought, sold, or exchanged to reflect the best possible interest of the asset owner/acquirer. In the metal alloys industry, this concept is especially important due to the complexity of the market. For market liquidity to be ideal, there must be a listed exchange where buyers and sellers can trade assets in a fair and confidential manner. Unfortunately, the metal alloys market is often opaque, making it difficult for buyers and sellers to make informed decisions.

This market is an important part of the global economy, with ferrochrome and alloys being used in a wide range of industries, including aerospace, automotive, and construction. However, the market has historically faced complex issues price discovery representativeness, challenging possibilities of long-term planning and development.

Ferrochrome market continues to show unprecedented divergences at its inter-regional level, combined with some of even greater disproportions within each region between grades usually close in their values and semi-fungible in their usage. Because of that, the market will likely to be even less efficiently be serving its main purpose - to find realistic balance between supply and demand, considering all the complex current and anticipated parameters (quality, region, energy consumption, carbon footprint) in the supplier's costs versus consumer's value in use and to ensure long-term sustainable development from both producers and consumers perspective.

First and foremost, it's important to understand that market liquidity is dependent on trust. Buyers and sellers need to trust the exchange organizer to provide accurate, unbiased, and complete information about the current order book and information about matches, prices, and volumes. Without this trust, the market cannot function properly. In addition, the traditional approach to trading, which involves intermediaries and centralized platforms, can compromise confidentiality and increase the risk of fraud should this trust be broken.

Historic and modern-day examples have shown us that fairness and confidentiality are crucial in the market. For example: in 2018 LME introduced new rules to enhance transparency and accountability in the trading of base metals, while in 2022 there was certain criticism related to LME nickel situation and in 2021 Coinbase regulatory case hit the market. This last example illustrates why confidentiality and transparency is so important for the market.

Another important element of liquidity is the ability to execute buy/sell orders without causing a significant shift in market price, which always goes against the interest of the buyer/seller in question. But there's also an important element of privacy too. If an exchange holder or auctioneer could not ensure buy/sell orders properly could lead to unfair advantage.

A good example of confidentiality in market theory is the Vickrey auction. This is a sealed bid auction, where the identity of the bidders must not be revealed. Participants needed to trust that the auction would be carried out as per the auction rulebook and not be rigged. How would the participants be assured that the auctioneer does not open the bids as they are collected and provide unfair access to information to one participant? The Vickrey auction relies on trust.

A new generation of solutions has emerged to address these challenges, leveraging cutting-edge technologies such as confidential computing and trustful platforms. These solutions enable secure and transparent trading without the need for intermediaries or centralized platforms, while also ensuring confidentiality and data privacy.

SoftMetal is one such solution that has been developed to address the fairness and accountability complex issues that previous markets and platforms have faced. The platform leverages confidential computing to enable secure and confidential trading of metal alloys, including ferrochrome. Unlike traditional trading platforms, Soft Metal does not rely on intermediaries or centralized authorities and instead uses trustful technology to ensure that transactions are transparent, secure, and tamper-proof.

We will illustrate this another unique advantage of SoftMetal amongst classic/standard exchange trading more in the next article, or you can check into the platform now and see how it works.