Announcing NeoSwap x Mattereum Partnership

Well, it has been quite a wild past few years for the markets. Without doing an exhaustive history of things while we’re entering a period of extreme macro uncertainty…how did we get here?

In short, since COVID-19 (and in the lead-up to it) we have had countries turn on the money printers to an extent never seen before except in countries that experience (yep, you guessed it) high inflation.

So what happened in the UK, the US and many other countries, we’ve experienced high inflation. The UK has seen inflation in excess of 10% and the US 9%. Whilst it looks like it has peaked in the US, they are likely to see high inflation, well in excess of the Fed’s target of 2%, for a long time. In the UK the issue still remains. In fact, as I type this the Bank of England has just warned of a ‘material risk’ to the stability of the financial system and announced further plans to continue bond buybacks.

Source: https://www.statista.com/statistics/273418/unadjusted-monthly-inflation-rate-in-the-us/

All of this is currently being exacerbated further by a global liquidity crisis caused by supply chain issues (a hangover of COVID, short staffing), an energy crisis, uncertainty due to the war in Ukraine, Central Banks increasing interest rates in an effort to curb inflation while still engaging in forms of QE. Just take a look at the rapid increase in short-term interest rates below:

Source: https://www.ceicdata.com/en/indicator/united-states/short-term-interest-rate

In the UK all of this has resulted in low confidence in the financial markets and an increasingly weak GBP (which hit its lowest exchange vs USD since 1985).

There is no crystal ball for the future, but looking at the rise and rate of consumer credit that has continued into this crisis, it would be reasonable to expect the liquidity crunch to continue.

People are under pressure, their wages have not kept pace with inflation over the past decade now they certainly won’t! The cost of living is increasing at a rate not seen by most in this generation and their debt is getting more expensive. People are having to dip into savings if they have them, pay off debt (where they can, or default if they can’t) and all of this leaves them with less money to spend.

This comes on top of several decades of real wage stagnation. For nearly sixty years American purchasing power has not actually increased outside of the top few percent of earners. The society has become increasingly stratified during that period, and potentially increasingly unstable.

https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

The expectation is that Central Banks will continue to raise interest rates until the base rate settles somewhere between 3–5%, but where they settle is somewhat irrelevant, the real takeaway from all of this is that rates will continue to increase for the near future, with an uncertain outlook for inflation, in a country where workers haven’t caught a break in living memory.

With that being said

People’s relationship with fiat is evolving, and Western economies (and many others) have also fundamentally shifted. We don’t expect them to revert, the game has changed. Automation, globalization, and financialization all rolled through the economy leaving transformation in their wake. Always winners, always losers. Now the hot topic of the day is digitization.

Blockchains have brought us distributed immutable ledgers and records of ownership, with the ability to reassign that ownership immediately. As a technology, the blockchain is a database that was born of ledgers, and has most or all of the critical technical attributes for being a trustworthy way to store and transfer property and property rights.

You don’t need liquidity, in the current sense, if you can provide more efficient barter/ways to conduct commerce and blockchains are a perfect place to do this.

It’s worth taking a minute to think about what liquidity means. Broadly speaking, it can be thought of as the ability to buy or sell what you want quickly and at a price pretty close to what everybody else is paying. If getting something fast costs you 20 times the regular price the market is functionally illiquid, even if the goods are still for sale. Likewise, if you have to dump a 40-bedroom hotel with a leaky roof in 48 hours you might wind up parting with it for $200,000 rather than the five million it is actually worth. Getting a real price for real estate takes time and that means that functionally the real estate market is illiquid. That’s why buying and selling houses is such an enormous grind: the market is broken, intentionally so, for the benefit of middlemen.

But if we can rearchitect markets to enable people to get what they want in exchange for what they are willing to sell quickly, to sell quickly, such markets would be more efficient not because the buyers, sellers, and brokers have more money, but because the core economic mechanism design of the market does a better job leveraging the existing liquidity in the market. This new mechanism would enable trade when the lack of liquidity would otherwise cause prices to irrationally spike and dip, and make people afraid to transact. Such a mechanism recognizes that the central problem is not that people lack money but rather that they own the wrong things

What does all this mean? As more and more of the world’s items have their records of ownership come on chain and people have less liquidity, we expect to see the continued rise of the swap and recycling economy. These markets models are simply more efficient than conventional auctions, and even retail, which are incredibly liquidity hungry which is why (for example) supply chain finance is such a pain point for so many companies. Getting enough liquidity to perform efficiently in retail is hard.

Until now, it is only mainly digital items that have had their ownership recorded on chain as it has been largely impossible to attach physical world goods to their digital counterpart in a secure, legally recognised and simple way. As a result these previously-esoteric market mechanisms have been largely confined to the pure digital.

If you’ve been following our projects, you know where this is going…

So, what’s next?

Founded in 2017 by CEO Vinay Gupta, who was Ethereum’s launch coordinator, Mattereum is a blockchain start-up headquartered in London. Their vision is a world in which global commerce is trustworthy. To achieve this, Mattereum has created a system that transforms the on-chain digital trade of real-world physical assets — such as real estate, gold bullion and investment-grade wine — with legally binding information about the assets presented in Mattereum Asset Passports. This provides a Universal Bridge between the physical world and the blockchain that can put literally anything you can think of on-chain.

NeoSwap is at the intersection of all of these trends. An AI-powered framework for hyper-efficient commerce. NeoSwap allows you to find multi-way, multi-item trades that are win-win-win for all parties involved. NeoSwap is an AI-powered framework for web3 commerce that finds optimal multiway trades that redistribute assets and currency in a win-win-win manner. Combining Mattereum’s ability to bring physical items on-chain, NeoSwap offers people a platform to swap ownership of all these items in a way that has, quite literally, never been possible before.

Think about this. Mattereum legally binds ownership of physical assets to clients NFTs: buy the NFT, get the asset. Could be a gold bar, a painting, a piece of real estate — Mattereum has done all of these and more for client’s NFTs recently.

These NFTs then flow on to the NeoSwap protocol, just like any other NFT on NeoSwap. Now you can make a direct trade: a BAYC for a Miami penthouse and five cases of a fantastic vintage, plus a couple of MAYC you’ve always wanted. Penthouse owner gets two vintage Porches, and the BAYC winds up with somebody in the gold bullion business who is diversifying into crypto, while a dozen other people also give away what they don’t want and get what they do–in a single event. It’s a little like an auction, but all the bids go in at the same time and everything settles in a single multi-party atomic swap.

In short, it works like magic.

Here are a few examples of trades NeoSwap have found already, involving 8 people and 14 people respectively.

If you are interested in learning more about NeoSwap, you can read this article.

The post was co-authored by Kieran Parker-Moroney and Vinay Gupta, with special thanks to John Ennis, Ian Simmons and Jeremy Dicker.

Helpful links:

John Ennis Twitter
Vinay Gupta Twitter
NeoSwap Twitter
NeoSwap litepaper
Mattereum Twitter
Mattereum whitepapers

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Perfect swaps by design.

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