CIP#12 - Which tokens should be included in a gold pool?

PAX GOLD is the only one with a TRUST that ensures the ownership of physical gold to token owners.
This is very important for safety.

Don’t think it’s the only one and minimum redemption figure is a bit silly.

I wonder how many people actually redeemed $800k worth of gold with Pax

3 Likes

Where is the complete list of their bars and why do they have so many problems with their Allocation Report? It seems like a matter “trust” that the bars are all there.

4 Likes

Thanks for the thoughtful response.

The question in my mind remains, why is this small market worth the complexity and distraction right now? Curve is less than a year old and CRV is less than a month old. Should we focus on bigger and higher priorities?

I’m also very concerned that Curve is becoming a place that token sponsors can directly lobby the community for the listing of their coins.

I’d also like to hear from other people in this group as to why this is necessary, appropriate, and lucrative.

5 Likes

Hi @Jon,

Thanks also for your thoughtful comments and questions.

Obviously we’re biased!

However, everything has to start somewhere. It wasn’t long ago that Curve was at zero, and not so long before that (in the grand scheme of things) when bitcoin was trading for pennies.

Curve has a unique opportunity to be a first mover in creating decentralized liquidity between fiat denominated stablecoins and precious metals. To us, this seems like an obvious step forward in the DeFi world. And gold is just one of a plethora of potential real world assets that could back stablecoins.

The current market price of all above ground gold is over $12 trillion as compared to less than $400 billion for all digital assets currently tracked by Coin Market Cap.

It’s up to community stake holders to determine whether or not this is a wise use of resources but we think it’s a great opportunity. It seems virtually inevitable that asset-backed tokens will become a major market eventually and as of today it’s a market that is still largely untapped. We’d be honored to work together with Curve as early adopters in this new marketplace.

2 Likes

Just for the record I didn’t even know what Cache Gold was when we started the process of discussing a gold pool.

You can see the original discussion there [Discussion]Tokenised Gold Pool

4 Likes

The transparency of CACHE and the ability to see what I own along with being able to redeem for physical precious metals at multiple locations around the world is very important to me, especially in the current climate of how finances are being handled in countries around the world. I believe Cache’s model and technology along with scalability make it the superior choice.

3 Likes

I like PMGT (created on behalf of the Perth Mint)the corresponding gold asset is guaranteed by the Government of Western Australia and each token is backed 1:1. It seems to be the only guarantee of its kind in the world in the physical gold sector - this makes PMGT a low risk inclusion in regards to counter-party delivery risk.
Downsides

  • only one vault location (ships from Perth worldwide pending COVID)
    +/- minting fee to convert to physical (1 oz $20 fee, 5 oz $55 etc)
2 Likes

About liquidity and market caps of the tokens:

Why does it matter? We’re talking about stablecoins here, so the liquidity of the tokens themselves don’t really matter as they’ll have no effect on the price. They’ll all follow the price of Gold.
Instead what really matters is the solidity and trustworthiness of their backing.

About sXAU:

Its a derivative, so the mechanisms defining it are transparent. Its backed by SNX, its price will always follow the exact gold price set by whatever oracle they have on the Synthetix exchange, and the liquidity is independent of the current circulating supply of sXAU tokens because of how synthetics work.

About PAXG:

It can be redeemed for 1oz American Eagles or 1oz generic bars through one of their partners merchants available in the US and Canada.
https://alphabullion.com/redeem/
(Never tried it personally)

It’s based in the New York state and thus regulated by the NYDFS.
However like most gold tokens (except PGMT) there’s no clear and direct chain of backing between you the token holder and the actual gold.
Its pure trust in the company issuing it, but this one being based in the US and offering ways to redeem for physical gold are good signs.

About PGMT:

  • So we have a company called InfiniGold in charge of managing these digital certificates that are insured by the National mint through a service called GoldPass.
  • The token itself is a marginal and recent sub-service of their GoldPass ecosystem.
  • To interact with GoldPasses and redeem or buy them (which you can do directly independently of the crypto token) you do this through Infinigold’s services (they have an app) and you need to be KYC and its not available from all countries.
  • This company InfiniGold is not directly the Perthmint but seems to only exist in regards to it as a kind of subsidiary and is referred to directly on the Perthmint website as well. Its the company in charge of managing their GoldPass service of digital certificates.

That’s my understanding of it so far.

What makes PGMT for me the best gold stablecoin is that despite this it still seems to be the coin with the least intermediaries and the least parties to trust.
It has the simpliest and most transparent flow from user token to gold insured beyond reasonnable doubt (perthmint certificates).
Theres only one step requiring trust which is the swapping of token to the certificate. Once you have that, you have a claim backed by the Australian government.
So it makes it the only token when you as a token owner can ‘see’ what is backing the token by redeeming the actual legal certificate associated to it yourself.

So I’m in favor of these 3 tokens. PGMT, PAGX, sXAU.

3 Likes

It can be redeemed for 1oz American Eagles or 1oz generic bars through one of their partners merchants available in the US and Canada.
https://alphabullion.com/redeem/

That’s true but the premiums are very high. 8.30% for 1 oz and 4.48% for 1kg. It also seems as though there may be shipping fees on top of the premiums as well.

"WHAT ARE THE FEES ASSOCIATED WITH ALPHA BULLION TRANSACTIONS?

We try to avoid charging any additional fees. However, you may incur shipping fees, taxes, and duties. The rates may vary depending on your location."

Shipping seems to be only the US and Canada for now.

"DO YOU SHIP INTERNATIONALLY?

Yes! We are proud to announce that we do ship outside of the US. However, we are currently limited to shipping to Canada. Please note that we are constantly expanding the list of countries we can ship to. We will keep you updated on our site as we expand the regions we serve."

It still isn’t clear why PAXG doesn’t list all the bars in their allocation report.

As for PMGT, while the government guarantee is attractive, it seems that it’s only the Gold Pass certificates that are guaranteed, not the tokens so token holders may not be covered by the guarantee until the point at which they redeem their tokens for Gold Pass certificates.

The other issue is that you are beholden to a single entity in a single location, whatever their terms are and their willingness to redeem. Shipping could also be expensive and impractical from Australia depending on where the redeemer is based. You are also depending on them having immediate availability of whatever bar type you would like to receive. It is not the same as having specific allocated bars backing the token in a 1:1 ratio. We tried to sign up for redemption from four different countries to test it out back in May and none of them were accepted for redemption. Perhaps there is a list somewhere that clarifies which countries can redeem?

1 Like

Great summary @Ronchiporc!

PMGT:

  • I think it is also noteworthy that they do not charge any management or storage fees, so you are not loosing any gold while it is locked up. They also do not charge transfer fees.
  • It is the only token with a true gold player behind it. The Perth Mint does not need to create additional business models - their business is to refine, trade and distribute gold; you get it directly from the source.
  • As you described: the fact that it is linked to GoldPass means you can also liquidate a position (or buy more gold) when gas prices go through the roof and crypto markets go crazy

PAXG:

  • I think this is clearly the most liquid gold token around

In my view those two should definitely be part of the pool!

1 Like

Where and how can you buy or sell PMGT in quantity at or near spot?

“Free” just means it’s not allocated and is not the same type of product as tokens that are backed by specific bars. There are other unallocated gold tokens backed by mints that are a lot bigger like Vaultchain Gold.

PAXG has the biggest supply, but the individual markets are often a disaster in terms of liquidity, volume and how closely they track the spot price. Right now its overall average is $14 off the spot (not so much) but the range is $1853 to $2048, depending on what exchange and what pair.

2 Likes

It is the only token with a true gold player behind it. The Perth Mint does not need to create additional business models - their business is to refine, trade and distribute gold; you get it directly from the source.

Are Dillon Gage, Silver Bullion, Goldheart Bullion, The Safe House, Loomis and Brink’s not “true gold players”? Together they have annual precious metals sales well into the billions and also have billions worth of precious metals in storage.

Is it the Perth Mint that developed and owns the token or is it a separate company that is just using the Perth Mint’s Gold Pass to build a token (honest question)?

2 Likes

I think you can do it through the GoldPass app.
I’m not sure because i can’t use this app in my country. I couldnt find the list of countries where its allowed besides Australia.

1 Like

GoldPass and the token are both managed by that InfiniGold company as far as i understand. The token is just a sub-product of that GoldPass service providing digitalized certificates from the Perth Mint.
So neither are directly operated by the Perth Mint, but on the other hand that company seems to be a kind of subsidiary of the Perth Mint that only exists in relation to it (to the point of getting its name for the token).

As for the companies you’ve mentioned, they might all have billions in management and be very fine and trustworthy but ultimately they’re all just… private companies.
If i have to chose between a major national mint and a private company, i will prefer to go for the national mint backed directly by a government. The mint itself is much less prone to failing and not honoring its debts.

2 Likes

I’ve heard it said that, “In Silicon Valley, we often get the technology right but the decade wrong.”

This seems like one such case in point.

Today, this is a low volume, low value market.
Where is the evidence that crypto investors care about gold and gold investors care about crypto?

There are many sites where you can trade your crypto for gold. I did it once six years ago. That site no longer exists! And in the time since then, I’ve not seen anyone interested in doing so.

It seems like either someone is a crypto/defi investor or they’re a Peter Schiff gold bug. There isn’t a lot of middle ground. Is something happening in the gold market that is going to make tokenized gold appeal to the the breed of investors who are so distrusting of institutions that they choose to buy rocks?

I’ve heard the arguments from @cache.gold and I appreciate them. But I’m left wondering…

Is there an actual market or use case here?

I think it’s a genuine concern but I think the answer is that we won’t know until we do it. Bitcoin on Ethereum was tiny up until Curve started adding it. Maybe people thought there wasn’t enough interest before that.

I will say that this has been by far the busiest proposal which to me means there is at least some interest for this.

I can confirm a formal DAO proposal will be submitted with the following tokens:
XAUT/PAXG/sXAU/CACHE/PMGT

8 Likes

It is understandable, but why not XAUT as in the sub-pool?

1 Like

I think it’s hard to know if this will be a success or flop but there’s optionality to listing pools and there’s not really much marginal effort to maintain their support.

I hope this is the first of many such forays into assets beyond dollar stablecoins. :upside_down_face:

2 Likes

XAUT is the only gold token that covers Switzerland.

@raddy Indeed, if it’s not getting enough action, it doesn’t damage Curve or CRV in any way, we can just move on to something else.

2 Likes