Comdex - An interesting Bear market option.
Comdex has recently launched its chain and has already achieved deep liquidity on Osmosis and a nice coin price around the $5 mark. Firstly, If you have not yet checked, see if you qualify for the airdrop to OSMO, ATOM, LUNA and XPRT stakers or LP's. But the platform they are building is due to launch with the team aiming for launch by the end of February.
Synthetic Commodities DEX.
The AMM that the Comdex team will launch will be a fairly unique offering. LP's will be able to mint synthetic commodities tokens - cAssets like cGOLD, cSILVER, cOIL and down the track all sorts of other commodities (coffee, and wheat for example). This will bring a completely different investment opportunity for many crypto investors, with the commodities market being something many of us retail investors have little experience in.
An AMM for commodities brings a new dimension to crypto, with interesting options available to everyone - not just institutions and "accredited investors" like the traditional commodities markets. "Democratizing commodities" is a theme from the Comdex team, and it really is an interesting new option for crypto people.
To gather a better understanding of how the platform will work, this article goes in to all the details of how it will work. I won't cover in more detail the mechanics of how minting, collateralizing CMDX and other Cosmos assets, check that post for all the details.
The vision behind Comdex is to enhance the accessibility and inclusiveness of finance by reducing obstacles and restrictions. Through the introduction of the synthetics protocol, investors in the Cosmos ecosystem can now broaden their investment horizons by accessing a range of synthetic assets that target uncorrelated returns in assets that are anti-inflationary in nature and offer intrinsic value.
Quote from linked article
Bear market option?
Why look at Comdex as a good potential option for a bear market? My perspective is that many are planning to move in to stable coins when they feel that the market is turning bearish. Stablecoin yield farming is an attractive option during market downturns, and one that didn't really exist back during the last major bear market.
However, what if inflation keeps growing. A bear market during high inflation times makes stables (invariably USD stable coins) much less appealing. We saw US inflation print 7% recently, and that is just the official number, and many people consider it to be very understated to reality. What inflation does in effect is reduce the attractiveness of stable yield farming. If you can earn say 12% yield on stables, but inflation is 7%, then obviously your real rate of return is just 5%. Still better than loosing value on crypto's in a bear market, but what if there was a better option?
Would a synthetic GOLD token, in a yield farming LP be a better option than a stable coin during a bear market? What about SILVER, or OIL, or something else? Commodities open a completely different option, and potentially an inflation-proof option. Without deep diving into lots of historical data, it makes sense that commodities will keep pace or exceed inflation over time. Commodity prices going up in fact contributes to inflation to a significant degree.
So, a general downturn during a high inflation environment could be the perfect driver of growth and activity for Comdex. CMDX might turn out to be a terrific bear market investment, and the AMM they are building may just be the answer for many to high inflation.
For further insight into this theory, I'd highly recommend this podcast on the "new trust economy" program featuring Comdex co-founder Siddarth Patil.
Aside from the discussions around commodities as good bear market investments, what really stood out for me was the depth of experience that the founders have in the commodities market. These are not blockchain geeks trying to learn the commodities industry as a good niche to target. These are TradFi people that can build out a crypto alternative, making it available to all instead of just a handful of market insiders and corporates. Deposit some ATOM, collateralize it into a position on OIL, add to an LP position with CMDX and earn yield from trading fees and incentives. Just one example of what will be possible on Comdex.
This also shows the beaty of the Comsos SDK. Building a brand new chain is the easy part of the process. Just spin it up, build a validator network and token, and then get on with building your actual product. There are a number of other interesting aspects to the Comdex platform, including a unique use case for NFT's in relation to trade financing that are also worth a look into if your are interested.
I have shared my plans for building Comdex into a core component of my portfolio in previous posts. My latest update is that I have finished building my initial stake of 2000 CMDX. The second step is to build my Osmosis LP positions in both the CMDX/OSMO and CMDX/ATOM pools.
Once the Comdex AMM is live, I plan to learn how to participate - and will likely produce some tutorial posts. Currently I have no precious metal holdings, and synthetic versions appeal to me much more than physical. I know that may upset some of the Gold and Silver enthusiasts (like my mate @silverstackeruk) but I would just prefer the convenience of keeping a set of wallet keys safe than keeping physical assets safe. Each to there own, but I am really looking forward to building some exposure to these PM options, as well as other commodities. Heck, I drink enough coffee that I should have an investment in it somewhere.
Thanks for reading,
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