On August 31, 2020, Morpher Labs introduced the launch of its flagship Ethereum-based contract trading and prediction market platform, Morpher, with the said objective of offering customers limitless entry to long-and-short trades of real-world shares, commodities, and FOREX markets.
The technical obstructions of such a objective, nevertheless, have traditionally confirmed difficult to navigate.
In a latest interview with Cointelegraph, Morpher Labs CEO Martin Forehler defined that Morpher’s imaginative and prescient is to permit worldwide entry to asset lessons that usually have a number of boundaries within the type of geographical restrictions, middlemen, and steep charges.
“The objective of the platform is to allow anybody residing on Earth to commerce property 24/7, that includes minimized charges and with no need a counterparty,” stated Forehler.
Many initiatives harbor related ambitions, however have been hampered by the seemingly intractable downside that arises every time initiatives attempt to supply on-chain customers entry to real-world property and their worth motion: liquidity.
Synthetix, for example, permits customers to mint artificial property that observe the value of real-world property akin to gold or the Nikkei inventory index. Nonetheless, their platform requires customers to carry a amount of SNX tokens at a 600% ratio to the worth of their artificial asset portfolio with a view to mint new synthetics or withdraw their funds.
Equally, prediction market Augur permits customers to wager on the result of real-world occasions — say, if the value of a particular asset exceeds a sure threshold inside a specified date — however the protocol has by no means managed to crack $three million in TVL, in line with DeFi Pulse.
In these situations, liquidity both comes within the type of a heavily-collateralized rooster, or as an egg that by no means hatches.
Morpher, in the meantime, is making an attempt to sort out the liquidity downside with a token-economic answer.
“The [Morpher] good contract creates or destroys MPH token relying on the result of [a] wager,” explains Forehler. “E.g. a 100 MPH token wager on Apple turns into 110 MPH if Apple good points 10%, or 90 MPH if Apple loses 10%.”
This peer-to-contract system hypothetically permits for limitless liquidity, as any consumer can enter and exit a MPH-denominated wager of any dimension.
Nonetheless, Hristo Piyankov, a token economic system professional and Chief Knowledge Officer at REINNO, cautions that this mannequin could result in conditions the place liquidity dries up for MPH holders.
“To provide an instance,” Piyankov defined to Cointelegraph, “If at present 1 MPH is traded for 0.015 DAI after which abruptly the overall provide of MPH doubles (as a result of a tracked underlying asset doubled in worth), wouldn’t it be attainable to promote all these newly minted MPH for 0.015 DAI every (the definition of liquidity), or would this drive the value of MPH down (suggesting that the token is illiquid vs different well-established currencies)?”
When requested about this dynamic, Forehler contends that such worth fluctuations happen in real-world markets as effectively, although with much less extremes.
“If the common consumer has a return of say 5 p.c per 12 months, there are 5 p.c extra MPH token that 12 months. Assuming a continuing market capitalization, solely customers with returns better than 5 p.c make a revenue, whereas everybody with decrease returns has a loss,” he says.
“This may increasingly appear odd at first, but it surely simply replicates what occurs on conventional markets. Merchants who don’t outperform the inflation price lose, even when their nominal returns had been optimistic,” he added.
Up to now, the outcomes of Morpher’s mannequin have been combined. In accordance with Forehler, within the almost two months since launch Morpher has attracted 28 thousand customers. The Morpher Twitter account, nevertheless, has reported quite a few withdrawal outages.
Whereas it stays to be seen if Morpher will be capable of remedy the issues confronted by prediction markets, Forehler stays a zealot for the top mission: to supply world entry to actual world property with out middlemen:
“We’re satisfied that the complete potential of the Morpher Protocol will solely unfold as soon as it’s universally accessible, and we’re working onerous on making that occur.”