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

[Jon]

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?

[charlie_eth]

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

[gunboats]

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

[raddy]

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.

[charlie_eth]

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.

[mcg]

Hey everyone, late to chime in here but I wanted to mention wDGLD as a leading gold token that should be strongly considered for the gold pool.

DGLD is backed by a Consortium comprising of CoinShares, Europe’s Largest Digital Asset Manager, Blockchain.com, the World’s most popular crypto wallet, and MKS (Switzerland) SA, part of the world’s most trusted gold group in Switzerland.

DGLD is a digital asset (token) representing allocated physical gold stored in a Swiss vault and tokenized with a side-chain built on the Bitcoin network. Best understood as a digital proof of ownership of allocated gold, DGLD leverages the power and immutability of the Bitcoin blockchain to provide convenient purchasing of gold with the independence of physical gold ownership, and the 24/7 nature of digital assets.

The team recently launched wrapped-DGLD which is an ERC-20 token on the Ethereum network that is pegged one-to-one with DGLD. wDGLD unlocks interoperability b/w the two networks and is actively building in the DeFi industry and should be considered in the pool as it is the most robust, trusted, liquid with no spreads, and technically scalable gold token.

The main elements that should be considered when considering a gold token are i.) liquidity ii.) technical scalability iii.) trust/transparency.

wDGLD is able to provide liquidity for a tokenized gold pool via its designated liquidity providers (which anyone can become) which have direct access to create/redeem at will while maintaining no spreads on the price of gold (unlike the other gold tokens which results in wDGLD being a good stable gold token to arb with to fetch yield). The LP’s, which include CoinShares trading desk, can source liquidity from the DGLD network where there is nearly $30m in active liquidity.

Also, the tokens are backed by the leading partners in the industry and precious metals and stored at one of the most reputable vaults in the world in Switzerland with PAMP SA, with active audit reports.

Some additional links here.

Website, Whitepaper, MKS Press release, Blockchain Exchange,

@charlie_eth @Ronchiporc @Horticulturalist @WormholeOracle @Jon

[Horticulturalist]

You’re right ‘free’ means unallocated and in the event of insolvency, such holdings are treated as a liability of the bullion vault and therefore subject to write down/unrecoverable losses.

My understanding is that Perth Mint’s unallocated gold holdings are free because it provides the Mint with working capital for its operations but unlike other unallocated, this is still covered by the Western Australian Government’s guarantee to make good against losses that may arise.

[rick98]

This looks like the worst of all of them (even worse than XAUT).

MKS (Switzerland) SA, part of the world’s most trusted gold group in Switzerland.

Who is the central authority that decides who is the “world’s most trusted gold group” (whatever that even means)? I must not be on the mailing list for their newsletter.

side-chain built on the Bitcoin network.

So some proprietary bs that’s centrally controlled like Tether Omni but significantly worse because you have to “apply” for a wallet.

The team recently launched wrapped-DGLD which is an ERC-20 token on the Ethereum network that is pegged one-to-one with…

So more steps and more gas to burn.

1,500 tokens controlled by 5 addresses with an implied value of ~$280,000 assuming the current exchange rate for wDGLD/USDT on Uniswap is correct (or close to it). I cannot check this because I do not possess the advanced mathematics degree required for pricing DGLD.

have direct access to create/redeem at will while maintaining no spreads on the price of gold (unlike the other gold tokens which results in wDGLD being a good stable gold token to arb with to fetch yield).

Sounds like nonsense. Any issuer of any token can do this if they want to. Unless a gold producer is donating gold to them, there’s always a spread but for major dealers and distributors it’s small.

Some additional links here.

Indeed:

1. "All Network Participants Are KYC’d

The KYC requirement for DGLD wallets means no known bad actors can transact in the DGLD network."

Hardly seems like a selling point for a token being proposed for DeFi platforms.

2. They claim it’s redeemable but there doesn’t seem to be instructions on how you can do it on the website. It’s buried in the terms and conditions and sounds like a complete backwards and low-tech process involving sending e-mails and forms and waiting for them to e-mail you back a list of “available bars” (you can’t make this up). It also says that you are “applying to redeem” which sounds distinctly like they can “reject” your “application” for any reason at any time and they even go so far as to say they will rob you of your redemption fee for a rejected application. I could not find anywhere in the terms that say what the redemption fee is.

3. Wow look the fees. 1% per annum!. Plus, the token inflates to accomplish this. Imagine what a nightmare it is to price and track this! What Are The Fees Associated With DGLD? | DGLD

4. “Apply for a wallet”? That doesn’t sound very decentralized or blockchainy to me. In fact that sounds more like a bank account or a brokerage account.

5. Where are the assets? Where is the list of the bars? What kind of bars are they? What is the minimum redemption? Is it 430 troy ounces like PAXG and XAUT?

It is absurd to even try to pass this token off as being anything like the others, it has almost nothing in common with any of them other than the claim that it is some kind of digital token that is backed by gold. It also has the worst imaginable design and seems to be the least transparent (even worse than Tether). I am stunned at how poorly designed this token is. It has the opposite of almost everything I would want in a gold token.

[rick98]

I do not understand the logic in thinking that unallocated gold is somehow safer than allocated gold. Bars that are already there and already backing a token are obviously better than some pool gold even if a mint backed by a government owns the pool. During a crisis there well may be shortages of physical gold which could cause a huge delay in your redemption, or even worse, the government unilaterally decides all redemptions will be for fiat currency which is likely exactly the thing you are trying to avoid in such a crisis.

This token is not in the same category as the others.

My understanding is that Perth Mint’s unallocated gold holdings are free because it provides the Mint with working capital for its operations but unlike other unallocated, this is still covered by the Western Australian Government’s guarantee to make good against losses that may arise.

That sounds a lot like “I am making a loan to the Australian government” - really not in the spirit of a redeemable gold backed token. Sounds like another crazy paper instrument that may or may not be convertible to gold on demand when TSHTF.

Furthermore, it doesn’t seem like the tokens are actually guaranteed, it’s the certificates that are, which means you need to convert your tokens to the certificates to be protected. Do you have a crystal ball to know when exactly to do that to protect yourself if/when TSHTF?

Has anyone actually converted PMGT to Gold Pass certificates? If so what country are you in and how smooth was the process? And then after that did you try to redeem into physical? How did that go?

Why would anyone assume that the Australian government (or any government for that matter) would never screw anyone? According to the news I’ve read lately, Australia is becoming a really bizarre combination of police state and nanny state (using the coronavirus as an excuse of course). I do not trust governments in general but Australia definitely is not one of the “cleanest dirty shirts” on that list.

Separate topic

Why in the world is UPXAU leading the poll? This is just a copy of PMGT and has all the same problems and issues but in addition, it’s not listed anywhere and has a whopping 99.637% of the supply in the hands of the issuer.

[cicoins]

Regarding lack of details using the “Allocation Report” tool - it’s stated that the tool does not work for custodial exchanges/wallets (tool limitation rather than lack of gold backing). Paxos does publish monthly attestation reports audited by Withum which certifies the requisite backing.

Where is it stated that the “tool doesn’t work for custodial exchanges/wallets”? Why would that be? How would “the tool” know the difference between a custodial or exchange wallet address and any other? Why would a tool be designed with such a limitation? Where is the complete list of bars if the tool can’t do this and what good is the tool if it doesn’t provide a complete list?

Binance is an exchange and the tool seems to work fine for Binance. The only address I could find that it doesn’t work on is the treasury address which holds more than one third of the total supply.

This just doesn’t make any sense to me.

https://etherscan.io/token/0x45804880De22913dAFE09f4980848ECE6EcbAf78?a=0x3f5ce5fbfe3e9af3971dd833d26ba9b5c936f0be

Edit: It also works on Crypto.com and Nexo.io addresses.

[PMGT.InfiniGold]

I know this contribution is late in the discussion, but I have not found a more current thread on this topic.
There have been some mentions of PMGT, The Perth Mint, GoldPass and UPXAU in this thread and as member of the InfiniGold team, I would like to take the opportunity to provide a bit of background that might help clarify a few things:

GoldPass is a digital investment platform offered by The Perth Mint that allows investors to securely trade, hold, transfer and redeem physical gold stored at The Perth Mint via digital certificates. It is developed and operated by InfiniGold, but users that sign up become customers of The Perth Mint.

PMGT and UPXAU are both 1:1 tokenising GoldPass certificates as ERC20 tokens, and therefore share many similar characteristics including The Perth Mint as the custodian of the underlying physical gold that backs all GoldPass certificates, with every ounce of gold guaranteed by the Government of Western Australia.

Perth Mint Gold Token (PMGT) is issued by InfiniGold and is designed to disrupt and provide a cost effective alternative gold product for institutional and corporate investors, funds and inter-dealer brokers. Via The Perth Mint GoldPass, it is fully redeemable into a range of The Perth Mint’s products - from small 1 oz cast bars to 400 oz LBMA-accredited London Good Delivery bars, enabling institutional investors to take advantage of price arbitrage between the digital world and the traditional marketplace

UPXAU is designed for retail and high net worth individuals. It is issued by the Universal Protocol Alliance (UPA), developers of the underlying Universal Protocol (UP) Platform, that tokenizes digital assets. UPXAU is fully integrated into the Uphold platform, is spendable on a debit card and users can also earn interest on their UPXAU holdings via Cred and redeem their tokens for physical bullion. UP, with its product UPXAU, is focused on developing alternative currencies, where users can move away from traditional fiat currencies and hold and spend their wealth in alternatives like gold.

I hope this helps to clarify the relationships between the different products.

As the developers of GoldPass, issuer of PMGT and technology provider to The Perth Mint, we believe that given its functionality, spendability and ability to borrow etc, that UPXAU is the right choice for decentralised exchanges.

Honoured to see that PMGT received so many votes in this poll and we would like to thank all our supporters. Our preference is that UPXAU is selected for the Curve gold pool.

Andreas Ruf

[fsenti67]

A few questions:

1. In what countries can PMGT be redeemed? Is there a full list published somewhere?

2. Where/how do you redeem UPXAU? I didn’t see the option in the Gold Pass app. Is there a different app? In what countries can that token be redeemed?

3. Are the tokens government guaranteed or just the certificates?

4. What exactly is the guarantee if the Perth mint can’t deliver the desired type of physical on demand? Since these certificates are backed by unallocated gold, it doesn’t mean the Perth Mint would need to be insolvent just that they lack the desired physical gold in the desired form at the time of redemption.

5. How can you prove to token holders that you hold equivalent certificates to the number of tokens in circulation?

6. If a token holder is blocked from redeeming due to their jurisdiction, what can they do?

7. What recourse do token holders have been n the event that Infinigold doesn’t have enough certificates to back the tokens?

8. Can the redeemed physical gold be shipped? If so to what countries? Does the list differ between UPXAU and PMGT?

[danschatt]

Hi all,

Dan Schatt from the Universal Protocol Alliance here. Happy to answer you questions –

1. In what countries can PMGT be redeemed? Is there a full list published somewhere?

Answer: Australia and the US

2. Where/how do you redeem UPXAU? I didn’t see the option in the Gold Pass app. Is there a different app? In what countries can that token be redeemed?

Answer: UPPXAU can be redeemed for gold via Uphold. UPXAU can currently be purchased or sold on Bittrex Global and Uphold.

3. Are the tokens government guaranteed or just the certificates?

Answer: UPXAU are backed 1:1 by GoldPass Certificates. The Perth Mint is the custodian of the underlying physical gold that backs all GoldPass certificates, with every ounce of gold guaranteed by the Government of Western Australia.

4. What exactly is the guarantee if the Perth mint can’t deliver the desired type of physical on demand? Since these certificates are backed by unallocated gold, it doesn’t mean the Perth Mint would need to be insolvent just that they lack the desired physical gold in the desired form at the time of redemption.

Answer: While certificates are backed 1:1 with allocated gold by the Perth Mint, a particular product (specific coin types) can be out of stock, but The Perth Mint is the largest refiner of newly mined gold in the world with an annual turnover of $18bn in precious metals, that is 10% of the global gold production, so there will always be gold products available.

5. How can you prove to token holders that you hold equivalent certificates to the number of tokens in circulation?

Answer: The Universal Protocol transparency page allows token holders to view the exact number of tokens that are minted, net of those that have been burned. The smart contract code is audited and monitored by CertiK. The 1:1 substantiation reflects issuance of the exact number of UPXAU tokens by the Alliance equivalent to the number of Perth Mint-backed Goldpass certificates on deposit in an Alliance Goldpass account. Any minting request gets independently verified by UPA and Certik to ensure that increase in total token supply is matching referenced gold deposit in the Alliance GoldPass account. Similar process is in place for burn requests in opposite direction.

6.If a token holder is blocked from redeeming due to their jurisdiction, what can they do?

Answer: A token holder who is in a jurisdiction that does not permit redemption can still freely sell UPXAU for fiat or cryptocurrency.

7. What recourse do token holders have been n the event that Infinigold doesn’t have enough certificates to back the tokens?

Answer: The custodian for GoldPass Certificates backing UPXAU is the UP Alliance, not InfiniGold. UPXAU tokens are, by design, always backed 1:1 with GoldPass Certificates

[ilonson]

Answer: Australia and the US

Why only two of the world’s 195 countries? Why do I still get this message even when registered in the US?

“Due to regualtory requirements, PMGT is not supported in your jrusidction.”

UPPXAU can be redeemed for gold via Uphold. UPXAU can currently be purchased or sold on Bittrex Global and Uphold.

How do you actually get the physical gold? Is this also only for the US and Australia?

Answer: UPXAU are backed 1:1 by GoldPass Certificates. The Perth Mint is the custodian of the underlying physical gold that backs all GoldPass certificates, with every ounce of gold guaranteed by the Government of Western Australia.

That doesn’t answer the question, are the tokens guaranteed or just the certificates.

so there will always be gold products available.

Debatable.

The custodian for GoldPass Certificates backing UPXAU is the UP Alliance, not InfiniGold. UPXAU tokens are, by design, always backed 1:1 with GoldPass Certificates

How does that answer the original question. What is the recourse against UP Alliance then?

is matching referenced gold deposit in the Alliance GoldPass account.

How can the general public see and verify “the Alliance” and/or Infinigold’s Goldpass Account balance?

The Universal Protocol transparency page allows token holders to view the exact number of tokens that are minted, net of those that have been burned.

Where is this transparency page? That sounds like the same information anyone can see about any token on Etherscan.io or any other block explorer. What is the proof the outstanding token balance matches the GoldPass balance other than “trust us” or “trust CertiK”? How is that verified? What is the recourse in case they don’t match up?

[serrynaimo]

Is there progress on this Gold pool? I’m still very interested in seeing this becoming a thing.

[charlie_eth]

There are a few CIPs that are higher priority but it will come to Curve eventually

[danschatt]

How do you actually get the physical gold? Is this also only for the US and Australia?

Answer: UPXAU are backed 1:1 by GoldPass Certificates. The Perth Mint is the custodian of the underlying physical gold that backs all GoldPass certificates, with every ounce of gold guaranteed by the Government of Western Australia.

That doesn’t answer the question, are the tokens guaranteed or just the certificates.

Answer: > The Issuer of UPXAU is the Universal Protocol Alliance. The Government of Western Australia guarantees the gold securely held by The Perth Mint that backs all GoldPass certificates. So it is the certificate that enjoy the guarantee and hence the tokens are backed by government guaranteed gold.

so there will always be gold products available.

Debatable.

Answer: The guarantee by the Government of Western Australia of The Perth Mint’s gold is not limitless. The Perth Mint’s inventory is closely monitored by its auditors and not allowed to decline below its guaranteed reserves.

The custodian for GoldPass Certificates backing UPXAU is the UP Alliance, not InfiniGold. UPXAU tokens are, by design, always backed 1:1 with GoldPass Certificates

How does that answer the original question. What is the recourse against UP Alliance then?

Answer: > If the Alliance were to disappear, you would still have a 1:1 substantiation between GoldPass Certificate and Token. UPXAU can only be minted if there are the same amount of GoldPass certificates backing it. CertiK is the code auditor.

How can the general public see and verify “the Alliance” and/or Infinigold’s Goldpass Account balance?

Answer: > Go to the transparency page – www.universalprotocol.io

The Universal Protocol transparency page allows token holders to view the exact number of tokens that are minted, net of those that have been burned.

Where is this transparency page? That sounds like the same information anyone can see about any token on Etherscan.io or any other block explorer. What is the proof the outstanding token balance matches the GoldPass balance other than “trust us” or “trust CertiK”? How is that verified? What is the recourse in case they don’t match up?

Answer: > **Go to the transparency page – and see for yourself. CertiK is a well respected institution.

Connecting Digital Assets

[/quote]

[ilonson]

How do you actually get the physical gold ? Is this also only for the US and Australia?

Answer: UPXAU are backed 1:1 by GoldPass Certificates. The Perth Mint is the custodian of the underlying physical gold that backs all GoldPass certificates, with every ounce of gold guaranteed by the Government of Western Australia.

The question was not “What is UPXAU backed by?” it was “How do token holders convert their tokens into physical gold?” (as in how a token holder get a physical bar that they can hold in their hand). What countries can do that? Is it US and Australia only? If not what countries are supported? PMGT claimed it was redeemable in the US and Australia only but apparently some US persons got a message that says “Due to regulatory requirements, PMGT is not supported in your jurisdiction.” (see above). Also, what does it cost to redeem?

Answer: The guarantee by the Government of Western Australia of The Perth Mint’s gold is not limitless. The Perth Mint’s inventory is closely monitored by its auditors and not allowed to decline below its guaranteed reserves.

Agreed, except for “not allowed to decline below its guaranteed reserves.” Unless Perth Mint simply stops to selling, when the reserves reach the minimum, supply and demand will decide what their reserves will be. If they simply stopped selling, are you suggesting they will hold a separate special reserve for Gold Pass redemption only? Would it be enough to cover all outstanding Gold Pass certificates? Would GoldPass redemptions be allowed or would they be halted until the minimum reserve is exceeded again? Is there any documentation on this anywhere?

How does that answer the original question. What is the recourse against UP Alliance then?

Answer: > If the Alliance were to disappear, you would still have a 1:1 substantiation between GoldPass Certificate and Token. UPXAU can only be minted if there are the same amount of GoldPass certificates backing it. CertiK is the code auditor.

Sounds to me like it’s just “trust us, they are all there.” I am asking what is the token holder’s recourse (and against whom) in case it turns out the backing is not 1:1 for any reason or “the Alliance” or one or more parties become insolvent (not the mint, any/all others involved)? How can the Gold Pass backing be transparently verified and guaranteed by the blockchain/smart contracts? How can anyone independently verify and determine this? I don’t see any way to do it.

It’s worth noting that auditing the code is different than a financial audit of the supply of the certificates, who holds them and that they are not otherwise encumbered. Seems like the Perth Mint themselves would be the best party to be attesting to how many Gold Pass certificates are held by any given token issuer and also that they are not otherwise encumbered in any way. Why wouldn’t this be public? Shouldn’t the Perth Mint, for example, be able to put on their webpage somewhere a statement that InfiniGold, Up Alliance or whoever holds X certificates and keep it updated in real time?

How can the general public see and verify “the Alliance” and/or Infinigold’s Goldpass Account balance?

Answer: > Go to the transparency page – www.universalprotocol.io

This page doesn’t even include the words “transparent”, “transparency” or even “gold”.

Answer: > **Go to the transparency page – and see for yourself. CertiK is a well respected institution.

“Trust CertiK” is not an answer, especially not in the blockchain world. This is just a web page with numbers. Where is the actual proof about the number of certificates held? The number of tokens minted is never going to be in dispute, any block explorer will show that at any time. The question is how can the number of Gold Pass certificates currently held be verified by the general public? Do these certificate have serial numbers or some kind of public digital/cryptographic proofs on who holds them? How does anyone know how many certificates are held besides “trust us” or “trust CertiK”? Other tokens provide bar serial numbers, brand, purity, weight, etc. What does UPXAU and PMGT provide?

edit 2: forgot additional screen shots of the “transparency page”.

What does %NaN mean?

edit:

Also found the “view certifications” link doesn’t link to anything (this one doesn’t work either).

[ilonson]

UPXAU has been listed on Bittrex since July 2020 with only a BTC-UPXAU pair? But it still has almost no volume, a total order book of only ~4 ounce ($7600) and a spread of ~15% (actually >17% from actual gold spot) - buy 0.1500 BTC (~$2,010) sell 0.1750 BTC (~$2,345) while spot price of gold is ~$1,873? Where is the market for this? Is it listed anywhere else?

And 1 UPXAU withdrawal fees (i.e. 1 ounce gold ~$1900 USD)? That must be a mistake? How does this go unnoticed so long?

Where are the certification reports mentioned above? These are all broken links still:

https://transparency.universalprotocol.io/certifications/UPXAU
https://transparency.universalprotocol.io/certifications/UPBTC
https://transparency.universalprotocol.io/certifications/

[cache.gold]

Now that $XAUT has been added to Curve, can we reopen this discussion? Neither $PAXG nor $XAUT have addressed any of the transparency and proof of reserve problems they have had for more than a year.

As for Tether Gold $XAUT, it seems to have gotten worse in fact, see: https://twitter.com/cache_gold/status/1462754861557202946?s=20

$XAUT seems like one of the least likely tokens to be fully backed and fully redeemable. Even in the unlikely event that Tether is totally on the up and up, you can still only redeem it in blocks of 430 $XAUT (~$780,000 USD) and since they will choose which bar you get (could be any size from 350-430) you will likely have tokens leftover you can redeem. Not a good system - not well thought and not well designed, unless the objective is to actually discourage redemptions.