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Carats launches a pricing index to bring tokenization to the diamond market | Venture Beat

Although it is not billed as a stablecoin, Carats does share some of the properties of that breed of cryptocurrency or token.

“If there’s one thing we can count on, it’s that diamonds won’t go out of fashion, and hence their value holds steady,” Carats cofounder and CEO Avishai Shoushan told me. “Our proprietary formula uses our reserve of actual diamonds and their cash equivalents to calculate the theoretical value of the Carat token, linking the entire Carats economy to a stable, physical asset. By pegging the value of the Carat token to diamonds, we’re able to stabilize its price, creating a reliable, low-volatility token.”

So how does it work? By tracking daily purchase prices and movement of the GDX, the algorithms that power Carats provide a data-driven benchmark of any diamond’s perfect price point. This provides a high level of transparency (pun intended).

“Through blockchain technology we can, for the first time, create a financial instrument for the diamond world that is scalable and effective,” Shoushan said. “Also, blockchain provides the all-important decentralized economy, eliminating most of the financial middlemen, lowering fees and reducing transaction times and entry barriers.”

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Carats launches a pricing index to bring tokenization to the diamond market.