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Tokenized Gold Finds Support through SALT and NEXO upon Launch

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Tokenized Gold Finds Support through SALT and NEXO upon Launch

Tokenized Gold aka ‘Pax Gold’

This past week brought the launch of PAX Gold. This new offering functions as a stable coin, backed by physical gold. The product was created, and launched, by PAXOS – a popular creator of various stablecoins, gaining adoption within the world of blockchain.

Most industry participants believe that valuable assets suffering from illiquidity are the perfect candidates for tokenization through blockchain. Gold fits this categorization perfectly – with PAX looking to capitalize.

PAX Gold is an ERC-20 based token, with each one representing one fine troy ounce of gold. This tethering to gold allows for the tokens to mimic gold markets. It also allows for holders to invest indirectly in precious metals, albeit in a more efficient manner, as the tokens are more liquid, and do not require storage fees.

Interest Accounts and Collateral

Upon launch, there was immediate adoption of PAX Gold, as multiple companies spoke out, indicating their upcoming support for the asset through various means. More specifically, two blockchain based lending platforms – NEXO and SALT – stepped up. The former will offer interest bearing savings accounts funded by PAX Gold, while the latter will facilitate crypto-loans which use PAX Gold as collateral.

This inclusion of PAX Gold within multiple platforms, such as those offered by SALT and NEXO, points to a bright future for stablecoins.

Whether being utilized as collateral, or a means of growing funds in an interest bearing account, industry acceptance of stablecoins continues to grow. Participants in the industry have recognized their ability to function as on/off ramps into crypto, and are now striving to support this.

Commentary

In the last week, representatives from Paxos, SALT, and NEXO, have each taken the time to comment on their usage of PAX Gold. The following is what each had to say on the matter.

Charles Cascarilla, CEO of Paxos, stated,

“In a digital and global financial system, owning physical gold is a cumbersome, outdated investment; it’s not easy to trade, divide, move or leverage against other investments. While it’s easy to trade gold derivatives – ETFs, futures and unallocated gold – these are synthetic representations, not legal ownership of physical gold, and have limited accessibility. Gold purchased through unaccredited retail outlets is not only expensive, but also risky as the quality and provenance of the gold are unverified…PAX Gold solves these fundamental challenges. It’s as easy to trade as ETFs or bitcoin, is extremely mobile and divisible, and it also gives holders ownership to the highest quality gold in the world. It’s never been easier to own or trade gold and we are thrilled to give both institutions and individual’s access to gold in a faster and cheaper way. By putting gold on a blockchain, we’re democratizing access to gold.”

Jenny Shaver, COO of SALT, stated,

“Precious metals are ideal for tokenization. Gold, as an example, has well-established institutional physical custody and a broad base of investors familiar with the asset class…Gold has traditionally been held as a hedge against inversely correlated assets like stocks and fiat currency, so it provides digital token holders with familiar asset diversification options. By offering PAX Gold as our newest collateral type, we’re adding value for our customers by combining the benefits of gold investing with easy access to funds via crypto-backed lending.”

 

Nexo

Based in London, England, NEXO is a blockchain loan company which was founded in 2017. Notably, they provide their clientele with access to instant loans/credit lines backed by crypto-assets. Operations have expanded to include interest bearing savings accounts.

Salt

This Denver, Colorado, based company was founded in 2016, and specializes in crypto-backed loans. In the time since their inception, SALT has managed to expand services to a variety of countries, including, but not limited to, the following:

  • United Kingdom
  • United States
  • Brazil
  • Switzerland
  • New Zealand

In Other News

NEXO is not the first company to offer interest bearing accounts funded with a stable coin. While they may be the first to utilize PAX Gold, others, such as BlockFi, already offer similar products. We recently took a brief look at some of the various stablecoin offerings on the market, and how they play a role in the BlockFi platform.

Stablecoins – Are they Gimmicky or Trendy

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Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Commodities

A First: Cryptoassets and Gold in EU Benchmark Compliant Index

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A First: Cryptoassets and Gold in EU Benchmark Compliant Index

CoinShares Group, the digital asset management firm took another step forward in establishing the presence of digital assets in the institutional investing space. 

CoinShares Launches New Digital Asset Index

The CoinShares Group announced the launch of the Coinshares Gold and Cryptoassets Index (CGCI). This is the first index that has exposure to a digital asset and is also compliant with the EU Benchmark Regulations (EU BMR).

A huge milestone for cryptoassets, as Bitcoin which is often touted as the digital version of gold as an asset class, becomes an integral part of a financial product for institutional investors that seek to have exposure to digital assets.

Moreover, the pairing with gold in this index is done to combine the high volatility of cryptoassets with the low volatility of the precious metal. The risk profile of the index is smoothed out considering that there is no high correlation between gold and Bitcoin, according to CoinShares Group.

The index methodology maintains a basket of 5 equally-weighted cryptoassets weighted against gold. There is no fixed list of cryptoassets eligible for being included, but the criteria is based on 6 month-rolling market capitalization and excludes any ERC-20 tokens and privacy-focused cryptoassets. 

The financial product goes through a re-balancing process, which occurs monthly, with the cryptoasset basket rebalances to include the top 5 eligible market cap weighted cryptocurrencies as of the time of rebalancing. The calculation of the index relies on Kaiko cryptocurrency market data along with Messari’s supply data – two leading data providers in the digital asset space.

Meanwhile, the weights between the cryptoasset basket and gold is determined based on a weighted-risk allocation scheme.

The development of the CGCI resulted from research conducted between CoinShares and Imperial College London, published in 2019, identifying that the pairing of gold and cryptoassets delivers a risk and return profile that is superior to holding either alone.

Cryptoassets Paired with Gold for Better Risk-Reward Profile

The index methodology was created from the research and experimentation conducted with the EU registered benchmark administrator, Compass Financial Technologies to ensure a robust and benchmark compliant index. As the first EU BMR compliant index, the CoinShares Gold and Cryptoassets Index is also live on popular financial data providers like Bloomberg Terminal and Refinitiv.

There are already several options for institutional investors to get exposure to cryptoassets, but with the high volatility of the market, investors may shy away from committing. This new weighted pairing with gold – one of the assets that is known to have a low volatility – allows investors to enter the digital asset space and benefit from higher returns while minimizing their exposure to volatility risk. 

The CoinShares Group already has a great track record in the cryptocurrency space with several financial products which include the first regulated Bitcoin hedge fund and the first exchange-traded Bitcoin product.

Daniel Masters, Executive Chairman of CoinShares believes this is a major step forward for the digital asset space drawing parallels with the institutional adoption of commodities, stating:

“Robustly researched and documented index products were the catalyst for institutional adoption of commodities in the late ’90’s through the advent of the Goldman Sachs Commodity Index. This crypto and gold index aims to do the same, by using academic research and its benchmark regulated status to pass muster with even the most stringent investment committees.”

The Evolving Space of Digital Assets

The digital asset space has been longing for the attention of institutional investors for some time. In the last couple of years there have been several incursions by big institutions into cryptoassets. Established traditional financial institutions like Fidelity or ICE have launched separate entities for the digital asset industry since then.

However the crown jewel for the crypto space remains to be an approved Bitcoin ETF by the SEC, which would cement the asset’s place in its separate category. Nonetheless this goal seems to be as elusive as two years ago.

Several applications from different asset management firms have been rebuffed by the regulatory authority, and each one of them citing reasons related to the supply side of the cryptocurrency market – the lacklustre custody options, the inaccurate price data and uncertainty over exchange volumes.

Even though the cryptocurrency space developed ever since and more custody solutions appeared for institutional investors, and data providers seem to have built more robust price indices, there is no talk of progress towards approval of  a Bitcoin ETF.

Maybe the key lies in the demand – when there is a sufficiently high institutional demand for digital assets, regulators may quickly change their tune.

CoinShares is part of this cohort of companies working to improve the infrastructure for digital asset financial products. With this new product, the company not only has the potential to generate institutional demand for cryptoassets, but also blazes a trail for further product innovation for others in the space.

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Commodities

ZiyenCoin to Tokenize the Oil Industry

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ZiyenCoin to Tokenize Oil Sector

ZiyenCoin has some big plans for the energy sectors moving forward. The firm seeks to integrate both blockchain and Internet of Things (IoT) technology to reduce costs for investors and consumers. This week, the company also announced plans to host an STO to further its US market positioning.

This news showcases a strong push by the energy sector to enter the blockchain space. In the past, there have been numerous blockchain energy platforms. Most of these systems tokenized electricity. It was only a matter of time before this highly-effective business model branched out into other sources within the energy sector.

Ziyen Press Release

News of the STO first broke via an October 15, 2019 press release. In the post, Ziyen Inc.’s CEO, Alastair Caithness details some of the firm’s new strategies, including important STO information for investors.

ZiyenCoin CEO Alastair Caithness via Podcast

ZiyenCoin CEO Alastair Caithness via Podcast

According to Caithness, Ziyen Inc. decided to create a new subsidiary solely focused on blockchain and IoT development in the oil sector. ZiyenCoin is the new firm tasked with tokenizing the oil sector moving forward.

Additionally, Caithness explained that Ziyen is no stranger to the market. For the last couple of years, the company worked closely with many of the largest players in the oil market.

At the same time, Ziyen expanded its holdings. Originally, in 2016, Ziyen entered the market as a software company focused on providing helpful information to energy investors. The company’s data was critical for oil, gas, power, and energy sector investment firms.

Ziyen Energy

In 2017 the firm pivoted to the holding oil assets under the subsidiary Ziyen Energy. Today Ziyen Energy controls 18 oil assets based in Illinois, Indiana, and Kentucky. The company wants to expand its market penetration with plans to secure and develop smaller oil fields across the US in the coming year. The STO will fund these ventures.

ZiyenCoin STO

The ZiyenCoin STO is open to both US and Non-US investors. Interestingly, Ziyen filed its STO as a 506c Security Token Offering with the SEC. This is the same filing as JPM Morgan’s token the JPM Coin.

Current Ziyen shareholders can convert their shares to tokens as well. The ZiyenCoin is an SEC-compliant security token. As such, US investors are required to adhere to AML and KYC protocols.

Excitement

Speaking on the news, Dave Rogers, Ziyen Inc. board member, and product strategist described the excitement surrounding the event. Notably, Rogers gave some unique insight into being a shareholder during a period of tokenization.

He explained that at first, he was confused as to the benefits tokenization brings to the table. Today, Rogers is part of the Ziyen team where he lends his 25+ years of experience to the company’s goal of tokenizing the oil sector.

ZiyenCoin – Oil on the Blockchain

Ziyen isn’t the first company to envision a more robust blockchain-based energy sector. There are already multiple solar and electricity-based platforms in use. Uniquely, the firm is one of only a few oil-based companies making the upgrade to a blockchain-based system at this time. You can expect to hear a lot more about ZiyenCoin in the coming months as its STO continues to draw investors.

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Commodities

Siemens to Tackle Green Energy with Swarm Capital

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Siemens to Tackle Green Energy with Swarm Capital

Sustainable Energy

Clean and renewable energy: The concept is simple, however, the execution is anything but. In an effort to aid the continued development and adoption of sustainable energy, worldwide tech giant, Siemens, has turned to a popular blockchain service provider – Swarm.

Today, this pairing of companies announced that Swarm has been tasked with developing an efficient, and effective, solution to facilitate the funding of energy projects in Africa. This task will be completed through use of the company’s recently announced premium tokenization service, Swarm Capital.

While details regarding the partnership are still scarce at this time, this is most definitely a positive announcement. Not only does it mark continued early adoption of Swarm Capital, but also the entrance of a global titan of industry in Siemens, into the world of blockchain.

Swarm Capital

Announced mere weeks ago, Swarm Capital is a service provider platform, offering premium services through a modular platform. This platform, which is built on the Swarm protocol, is meant to be a comprehensive solution for any company looking to tokenize an asset.

SWARM Announces ‘Swarm Capital’ Service Provider Platform

Commentary

In their partnership announcement, the team at Swarm took the time to comment on why blockchain is a good fit with future energy solutions through Siemens. They stated,

“One of the most compelling use cases for tokenization is in the energy sector, which has been brought to the fore lately in public discussions concerned with energy accountability, transparency, and sustainability. The energy industry is abundant with potential use cases — from the tokenization of energy itself to the digital representation of carbon emissions.”

Swarm

Swarm is a U.S. based company, which was launched in 2018. In the time since, the team at Swarm has developed a myriad of services and solutions for the digital securities sector, including specialized token standards, open protocol, and more.

Cofounders, Philipp Pieper and Timo Lehes, currently oversee company operations.

Siemens

Founded in 1847, Siemens has withstood the test of time, establishing themselves as a world leader in manufacturing and tech industries. The company has done this by continually looking towards, and planning for, the future – as evident by the partnership described here today.

CEO, Joe Kaeser, currently oversees company operations.

In Other News

For a few years now, we have seen various companies attempt to integrate green energy and blockchain. We have, in the past, detailed multiple companies that fall into this camp. While integrating blockchain and green energy in a different manner than the development discussed here today, the following articles demonstrate another avenue in which the two sectors can coincide.

CoinMint – Efficient, Green Mining

Elite Mining – The Future of Mining is Green

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