On August 31, 2020, Morpher Labs announced the launch of its leading Ethereum-based contract trading and market forecasting platform, Morpher, with the stated goal of providing users with unlimited access to long and short trades in the stocks, commodities and forex markets.
Historically, however, technical obstacles to such a goal have been difficult to overcome.
In a recent interview with Cointelegraph, Morpher Labs CEO Martin Froehler explained that Morphers’ vision is to provide global access to asset classes that typically contain multiple barriers in the form of geographic restrictions, brokers and high fees.
“The purpose of the platform is to enable anyone living on Earth to trade assets around the clock, with minimal fees and without the need for a counterparty,” said Froehler.
Many projects share the same ambitions, but they are frustrated by the seemingly unattainable problem that arises when projects attempt to provide network users with access to real assets and their price movement: liquidity.
Synthetix, for example, allows users to create artificial assets that track real asset prices like gold or the Nikkei stock index. However, their platform requires users to hold an amount of SNX tokens of 600% of the value of their synthetic asset portfolio in order to create new synthetic drugs or withdraw their money.
Likewise, the prediction market allows Augur users to place bets on the outcome of real events – for example, if the price of a certain asset crosses a certain threshold by a specified date – but the protocol has never succeeded in penetrating $ 3 million into TVL, according to DeFi Pulse.
In these cases, the fluidity can either be in the form of a highly protected chicken or an egg that never hatches.
Meanwhile, Morpher is trying to solve the liquidity problem with a token financing solution.
“The [Morpher] smart contract generates or destroys the MPH token depending on the outcome of [the game],” explains Forehler. “For example, playing with 100 mph codes on Apple gets 110 miles an hour if Apple gets 10%, or 90 miles an hour if Apple loses 10%.”
This peer-to-peer system provides unlimited liquidity by default as any user can enter and exit MPH-nominated games of any size.
However, Hristo Piyankov, symbolic finance expert and chief data officer at REINNO, cautions that this model could lead to situations where liquidity dries up for MPH holders.
Biankoff explained to Cointelegraph: “To give an example, if 1 MPH is currently selling for 0.015 DAI, then suddenly the total supply of MPH doubles (because the tracked asset has doubled in price), one can sell all newly minted assets MPH at 0.015 DAI For each (definition of liquidity), or will this lower the price of MPH (indicating the lack of liquidity of the symbol compared to other applicable currencies)? ”
When asked about these dynamics, Froehler argues that such fluctuations in value also occur in real markets, but with small extremes.
“If the average user gets a return of, say, five percent annually, then this year there will be five percent more tokens MPH. Given the constant market value, only users whose earnings are more than five percent are making a profit, whereas That everyone with less profit incurs a loss, he says.
It may seem strange at first, but it is just a repeat of what happens in the traditional markets. He added that traders who do not exceed the rate of inflation lose even if their nominal returns are positive.
So far, the results of the Morpher model are vague. According to Forehler, Morpher has attracted 28,000 users in the nearly two months since its launch. However, Morpher’s Twitter account reported multiple bouts.
It remains to be seen whether Morpher will be able to meet the challenges facing forecasting markets, Froehler continues to pursue his ultimate mission: to provide global access to true value without intermediaries:
“We are convinced that the full potential of the Morpher Protocol will only be unleashed when it is widely available, and we are working hard to achieve this.”