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The Cut

Industry Insights by Diamond StandardIndustry Insights

Spotlight on the Spot Market

October 5, 2022
4 min read
Diamond Standard

This Article Explores

    Diamond Standard recently announced the launch of a secondary market, enabling instant trading of Diamond Standard Coins. And, the best news: the Spot Market allows you to trade for FREE.

    Each Diamond Standard Coin contains a blockchain token, stored on a wireless chip inside the transparent plastic coin, underneath the fungible set of diamonds. Whoever owns this regulator-licensed token, owns the commodity, and can take delivery at any time.

    The Diamond Standard Spot Market is a peer-to-peer marketplace with a centralized limit order book, where individuals or market-makers can trade the Diamond Standard tokens for USDC stablecoins, issued by Circle and pegged to U.S. dollars. Thanks to the efficiency of blockchain transactions, there are no transaction fees for the trading.

    The Spot Market provides a safe “walled garden” where all users have gone through KYC and AML review. Trades on the Spot Market are for commodities already in custody. The Spot Market enables price discovery, as buyers and sellers will raise and lower their bids to find a taker.

    The Spot Market is offered by DS Admin Trust, a Delaware Trust that manages the custody of Diamond Standard commodities at Brinks, for their owners and traders. Unlike shares held by brokers or cryptocurrency held by exchanges, the Diamond Standard tokens are held in digital wallets directly controlled by the owners.

    While Diamond Standard's offerings of commodities and tokens are overseen by the Bermuda Monetary Authority, the Spot Market is not — it is a U.S. based venue.

    The Diamond Standard Spot Market is a huge leap forward for diamonds as an asset class. Trades have on average been within 1% of the spot price on Bloomberg, showing that our commodities are truly fungible. A Diamond Standard Coin is 'marked-to-market' daily, and trades with dramatically less 'friction' than loose diamonds, which can be 20-40%.

    Device - Macbook Air

    Diamond Standard Spot Market in Action

    • The Spot Market is public. Anyone can see the top of the book (the best bid and ask) and last trades.

    • Provides instant liquidity for owners of Diamond Standard commodities.

    • Enables market-based price discovery via live bidding.

    • Trades settle instantly via the blockchain token embedded inside every Coin.

    • Tokens are self-custodied in the digital wallet of the owner. In a trade, assets are transferred from seller to buyer. The Spot Market does not custody users' assets.

    • To bid, users must have USDC tokens on the Ethereum blockchain.

    • Does not currently charge any transaction fees. Buyers become responsible for custody fees, currently $36/year/coin, and physical delivery fees if requested.

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