London-based blockchain project Carats.io and diamond trading platform IDEX have entered into a partnership, under which IDEX will help the startup acquire diamonds to back its CARAT coin.
According to the memorandum of understanding (MoU), the two firms signed last week, IDEX will act as an escrow, or a neutral third party, for the start-up, supporting it with the purchase of diamonds and the process of transporting them from the source to the vault.
The stones will originate from enterprises that operate on the International Diamond Exchange (IDEX), in countries which prohibit crypto-diamond trading. Initially, the agreement includes acquisitions worth up to $120 million.
The two companies will also share data and work together to develop investment options built on Carats.io’s own cryptocurrency.
Commenting on the matter, Carats.io chief product officer Gabriel Diamant told news outlet Finance Magnates:
“The most important thing that we are doing with IDEX is that it will allow a diamond trader, with the press of a button, to complete the whole process of getting a loan with real money against the value of his diamonds.”
An ERC-20 token pegged to the value of diamonds, CARAT can be used to buy jewelry online and offline. This means that users can purchase CARAT coins with ETH, USD or EUR and then redeem them for diamonds. Carats.io, in turn, buys the precious stones from the Israel Diamond Exchange.
“The significant thing about the CARAT token is that it is not a regular cryptocurrency, but a one with a community and a well-defined ecosystem – the world of [jewelry] and diamonds. It is for this ecosystem that we chose IDEX, which the second biggest platform of its type in the world,” Carays.io president Eli Avidar said for Finance Magnates.