Blockchain technology will be used to trade sugar in the United Arabs Emirates (UAE) as the country looks to expand its blockchain strategy by 2021.
The world’s largest sugar refinery, Al Khaleej Sugar, revealed that it would eliminate brokers and allow clients to trade tokenised sugar 24/7. This latest development fits into the UAE’s blockchain strategy goals for 2021.
According to the Al Khaleej Sugar announcement, blockchain technology will be used on their DigitalSugar.io platform. The company launched a trading platform that allows people to trade tokenised sugar from all parts of the globe.
“DigitalSugar provides access to one of the world’s most popular soft commodities through a fully online platform backed by DMCC Tradeflow, a dedicated online platform for registering possession and ownership of commodities stored in UAE-based storage facilities”, the blog post added.
The DigitalSugar platform was developed in partnership with the Free Zone, the Government of Dubai Authority on commodities trade (DMCC) and Universa Blockchain. It is the first global exchange that offers traders the option to trade raw spot sugar. Most platforms offer sugar trading as standard options or futures.
Users of the DigitalSugar platform will trade the spot price of sugar using tokens. The tokens are tied up to 100,000 tonnes of raw sugar. The pegged tokens are assured by Universa blockchain, which has been tasked with issuing electronic warrants of ownership of the sugar tokens. Hence, traders and investors can hold tokens representing around 1 kg to 1M tonnes. They will pay 0.4% as exchange fees and a 2.5% yearly storage fee.
Jamal Al Ghurair, Managing Director, Al Khaleej Sugar, while commenting on this latest development, stated that the Emirates-Blockchain Strategy for 2021 was a government effort launched in 2018. The strategy is to allow the UAE to leverage blockchain technology to improve several aspects of the economy.
Al Ghurair added that Al Khaleej Sugar uses the most advanced technologies to tokenise commodities and encourage digital trading as the world battles the COVID-19 pandemic. Al Khaleej Sugar is also looking to update the current trade options and tokenise around 100,000 tonnes of raw sugar.
The PwC research had revealed that widespread adoption of blockchain technology could fetch the global economy an extra $1.7 trillion over the next decade. Al Khaleej Sugar wants to enjoy the dividends of the technology.
At the moment, Al Khaleej Sugar accounts for about 3% of global annual refined sugar production. The company’s products are regularly exported to over 50 countries globally, including the Arabian Gulf Region countries.