[Discussion]Tokenised Gold Pool

Summary:

Curve should have a new liquidity pool for tokenised Gold.

Abstract:

XAUT/PAXG are two gold tokens with generally decent liquidity. sXAU and PMGT are two more tokens with smaller liquidity that could be good candidates.

Motivation:

Tokenised gold lack liquidity to be as useful as they could be on the Ethereum blockchain. A Curve.fi could help solve this problem.

Please suggest candidates for the potential pool.

For:

Tokenised gold is a perfect candidate to expand the basket of pegged assets offered by Curve

Against:

It’s possible people would want Tether gold to be excluded.

Are you interested in a Curve Gold Pool?

  • Yes
  • No

0 voters

Would you want Tether Gold to be included?

  • Yes
  • No

0 voters

Please select which tokens you’d like added

  • PAXG
  • XAUT
  • SXAU
  • PMGT

0 voters

9 Likes

UPXAU is pretty readily available (also backed by Perth Mint, same process behind the scenes, different erc20 token)

It’s pretty liquid on Uphold, cheap to get with fiat rails, etc. Not too expensive to mint (20bps).

I’d definitely participate in a gold pool ^^

2 Likes

If circulating supply is a proxy for ease of access, then we have

  • Tether Gold (XAUT) at $94M and 300 holders
  • Paxos Gold (PAXG) at $58M and 3,000 holders
  • Synthetic gold for Synthetix (sXAU) at $0.5M and 239 holders.
  • UPXAU as Raddy although it has 22 holders, perhaps because managed for Uphold users.

In parallel, there is currently a proposal on AAVE governance to add commodities to the lending protocol and gold is an obvious contestant for collateral.

From the circ supply / numbers of holders, it looks like Tether Gold is easier to mint for whales, but that PAXG is easier to access to smaller investors. Trading volume on PAXG are also significantly higher. Perhaps sXAU is a product that Synthetix would like to push and they could add the SNX incentive to this pool.

I think tokenised gold is an interesting product ; it does not have the same risk profile to Bitcoin but serves a “similar” purpose as an inflation hedge with lower upside/downside. It makes for a nice collateral. I suspect there would be interest. I also suspect it would help Paxos and Tether to gain adoption for their gold product, perhaps there is a way for them to incentivise this pool creation as well?

We can compare PAXG/XAUT to USDT and sXAU to DAI. I think such a pool has merit ; similar to the pools with USDT/USDC/DAI/sUSD and I would be in favour of this proposal.

Note that PAXG has a 0.02% movement fee on each transfer

5 Likes

Have to note it has 0.13% movement fee and 0.6% demurrage fee(currently waived indefinitely)

1 Like

The transfer fee for PAXG makes it a big problem for a Curve pool no?

2 Likes

With current pools, it’s an issue, yes, but can be easily worked around

2 Likes

My concern with this proposal is market size.

gold.2

PMGT and sXAU have small floats and might be easily manipulated.

1 Like

Given these token represent an ounce of gold, what kind of manipulation are you foreseeing Jon?

There may be concerns with the issuers for custodial ones (Tether, Paxos) or you may be concerned by black swan events for sXAU for example, but I do not see manipulation possible as long as redemption works.

2 Likes

sXAU marketcap doesn’t matter, it’s on the synthetix exchange, infinite liquidity. But it’s a question whether people want some of that extra risk.

Also most people aren’t trading with sUSD and sBTC.

On the other hand, it’s quite interesting. In this case, sXAU might actually have the most liquidity. Useful for keeping the pool in check, easiest to arbitrage with.

XAUT/PAXG might not drive enough volume by themselves.

1 Like

Market cap of UPXAU is currently 5M, but I believe it’s growing pretty rapidly. I think UP would do a liquidity incentive of some kind too.

The pool has to be made fee-aware, that’s it

3 Likes

Regarding sXAU, my take is include it. I don’t think the risk of Synthetix blowing up is any greater than the risk that Tether or Paxos doesn’t really have the gold they say is backing the tokens (see https://cryptoresearch.report/crypto-research/discrepancies-identified-in-the-transparency-data-provided-by-pax-gold-and-tether-gold/). If Synthetix or Uphold would provide incentives - all the better.

4 Likes

I’m all for this proposal and it would be an awesome addition to curve pools, imo.

4 Likes

Honestly, I’m not sure. I simply don’t know the various ways that markets can be manipulated. My lockups are for 4 years and I have no personal interest in arbitrage. I’ve never taken a flash loan, nor do I have the skills for that either.

But warning lights go off for me when I see small markets, and all of these markets, even the Tether and Pax ones are so tiny that it seems like a distraction from the core business.

I think Curve needs to stay focused.

I could be swayed if there were some sort of incentive along the lines of the sBTC pool in which Synthetix/Ren/Balancer made that pool attractive for LPs.

2 Likes

XAUT should obviously be ignored because Tether is shady to say the least, and should be considered un-backed until proven otherwise.

At least the economics surrounding the sXAU derivative and the backing of its valuation are clear, while the 2 other tokens have credible physical gold backings.
So i’m in favor of a sXAU/PAXG/PGMT pool.

A pool being only as strong as its weakest token, I can say that if a gold pool is made including XAUT, i’ll personnally choose not to participate in it.

As for PGMT I find it funny to see it voted the least despite being what i think is the strongest Gold based token of the 4 by being directly insured by the Australian national mint (which is one of the major gold mints in the world) and having absolutely 0 fees.

Regarding the argument of “staying focused” , i’d say, if anything, it should apply first to all the existing -and incoming- USD pools…
I’m personally not interested in losing money with exposure to a depreciating USD and right now the only choice of non-USD pool is BTC.

So I think a gold pool would be a good thing, even it if it remains a marginal pool. As i understand it, being an easy bridge between similar stablecoins is the reason for this platform and there’s none for gold tokens right now… so its the perfect usecase for Curve.
Let’s just keep Tether out of it, no need for any additional risk on top of everything else.

9 Likes

Agreed on PGMT being severely undervalued here. We are already taking regulatory/institutional risk on USDC & wBTC in every pool we have. PGMT is the most credible gold token. Having sXAU offers a useful gateway into the Synth market and will make the pool have more functionality.

As for XAUT, if the ‘safe’ gold pool shows enough interest, we could consider a second pool that includes it at a later date. Especially when yield/collateral opportunities begin to open up for these tokens to a greater degree.

Who is going to bootstrap the pool? Each of us probably has a stack of one of the other, but i doubt anyone has all three or four in equal proportion and with 500 gas and poor liquidity on chain, somebody is going to take a beating being the first unless we agree to maybe trade privately and securely amongst ourselves beforehand to all equal up.

1 Like

Continuing the discussion from [Discussion]Tokenised Gold Pool:

This is Dan from Universal Protocol; we’re thrilled to see a gold pool under discussion for Curve and would be honored to be included.

We’re extremely excited to support Curve’s gold pool, and UP would be happy to incentivize increased liquidity. We’ll kick around some numbers and put up a post with details, but we’d both incentivize the pool and likely a 95/5 Balancer pool for our ecosystem reward tokens to help with their liquidity.

We’re excited to see this happen; we’re big believers in gold-backed tokens and see the merits of a variety of approaches. Gold tokens are a great fit for Curve, given the relative stability of the asset suits the Curve formula, and there’s many market participants likely willing to warehouse gold risk in a similar manner as stablecoins. Looking forward to being involved, and happy to support and promote as we can. Cheers.

4 Likes

Can get in touch with us on Telegram.

We expect a soft vote giving a chance to governance participants to choose which tokens they would like to see in this pool to go ahead in the coming days.

3 Likes

We would like to suggest that you also include CACHE Gold (CGT) in the list above.

We have submitted a proposal to create a liquidity pool with CGT and also a Maker Collateral Onboarding Application for more information.

2 Likes