Diamond-Backed Blockchain Token Raises $1.6M in First Funding Round

15/05/2018 09:45

Carats.io, an Israeli blockchain startup in partnership with the Israel Diamond Exchange, has raised $1.6 million in its first funding round led by Net Capital Ventures, an Israeli venture capital fund, the organization stated in a press release. Carats.io says it is issuing the first digital coin backed by diamonds. The coin, CARAT, which is 100% redeemable for diamonds is currently in presale. The company reports that they are registering large subscriptions for the token through the company website.

As the company explains, "diamonds are the only major commodity without an established financial market. Carats.io provides blockchain solution that allows traders to transfer value in the diamonds, finance and crypto market without the barriers associated with the current market. The CARAT token is the digital currency that underpins the solution. Just as the U.S dollar once had intrinsic value pegged to the supply of gold, CARAT tokens are pegged to real, GIA certified diamonds, which grant them intrinsic value. This means that each CARAT token can be valued by a number of diamonds’, and can be redeemed for real GIA certified diamonds."

According to CEO Avishai Shoushan, Carats.io is creating the first-ever viable secondary market for diamond commerce, combining the stability of diamonds with the liquidity of cryptocurrency. “We are bringing diamonds – the world’s most precious commodity – to financial markets as a safe, transparent and liquid financial asset,” he said. CARAT tokens are 100% redeemable for diamonds, because they are backed by real, certified diamonds. International accounting firm Ernst & Young is auditing the diamonds backup ratio. The company has created the Diamond Pricing Algorithm (DPA), which compares individual diamond grades to daily market conditions, based on not less than 14 diamond parameters. It has been deployed so far on over $11 billion worth of diamonds.

Carats.io uses state-of-the-art Big Data and blockchain technologies to tokenize diamonds. Tokens are a representation of a particular asset or utility that usually resides on top of another blockchain. They can represent basically any assets that are fungible and tradeable, and are easier to create than a cryptocurrency as it is not necessary to modify the codes from a particular protocol or create a blockchain from scratch. It is rather a process of following a standard template on the blockchain – CARAT uses the Ethereum platform  – that enables the creation of one's own tokens, which are typically distributed to the public through an Initial Coin Offering (ICO), which is a means of crowdfunding, through the release of a new token to fund project development.