Exclusive: Why Proof of Provenance is Essential for Gold Stablecoins?

Exclusive interview with Geoffrey Cher: Part 2

In Part 2 of our interview, Geoffrey explains why Proof of Provenance is so important for gold stablecoins! He also cleared up the confusion of the two tokens in Digix ecosystem:DigixDAO token (DGD) and Digix Gold token (DGX)!

We know Digix has launched DigixDAO token (DGD) and Digix Gold token (DGX). What are the differences between them?

Just to give a brief introduction for the company. The company is mainly founded by three individuals, Casey Chung, Anthony Eufemio and Shaun Djie. They identified the need for people to enter or exit the crypto industry more easily. One of the most recognizable and investable asset classes that is stable across time is gold. A gold-backed token can narrow the gap between the crypto space, the financial world, and gold. That’s how Digix is found.

For the two tokens in our company, first one is DigixDao (DGD). Prior to launching our DGX token, we did the first on chain crowdsale in March 2016. We released DGD tokens in exchange for Ether. We put all Ethers raised to the decentralized autonomous organization called DigixDao. The DigixDao is meant to be a vision where the community members of Digix or DGD holders will help building the ecosystem. The Ether raised in March 2016 is meant to fund community led efforts to grow, educate and increase the adoption of DGX tokens. We launched the DGX token back in April 2018. Since then, we tokenize or digitize one kg of gold every four days. We have an inventory size of about 106 kg of gold based in Singapore and Canada.

The community members of DigixDao made investments and they have benefits for the long-term growth of the company and of the DigixDao. The DGX tokens are another way to reward them for their efforts in building our community. A portion of DGX tokens goes to the rewards pool. This reward pool actually goes back to the DGD token holders who participate and help to grow the community.

Does that mean DigixDao (DGD) token has no monetary value?

The DGD token functions as an utility token. For example, we have a few DGD holders, each of us will either vote or contribute actively to the ecosystem and a marketing campaign. The DGD token gives you an access to vote on proposals, regardless. On the other hand, the DGD tokens allow you to propose ideas to be an active contributor to the ecosystem. What happens after that is the DGX token has a built-in function to create a DGX rewards pool that goes back to the DGD holders. Therefore, the more you actively participate, the proportionately higher DGX rewards you will get.

What is the Proof of Provenance Protocol on Digix?

With DGX tokens, because there's an underlying real-world asset involved, the Proof of Provenance is meant to show that the gold exists and it is of investment grade. With the Proof of Provenance Protocol that we have created, what we have done is basically giving our users the assurance that the gold is real. What happens in this process is that independent parties need to verify the quality and the supplier of the gold. The independent custodian of the gold needs to verify that the gold is real. You need to verify that its investment asset grade. The Proof of Provenance Protocol is a step by step basis, where independent parties verified the gold actually exists. The DGX tokens are created only when all independent parties verified the existence of gold. That means before the gold tokens are created, everything is already verified.

How Digix is compared to competitors such as GramGold Coin?

That's a good question. We are still at the early stage of blockchain industry. We still have many years to go and develop. Competition wise, we are the largest market cap in terms of total gold holdings and the dollar value of about $4.5 million on the Ethereum Blockchain. Most of these competitors currently are at the concept phase, whitepaper phase or fundraising phase. The fact is that we've launched the product for more than a year. We are the leading gold issuing company in the blockchain world to a certain extent. One of the key reasons why we think we are the leader in the space, other than being an early entrant to the space, is primarily because of the Proof of Providence Protocol. With that protocol, we try to be transparent and give comfort to our users that the gold actually exists. The users basically have full access to all the receipts and audit documents. These are public information available 24/7, and the documents are uploaded to a decentralized database called IPFS. That's something that we pride ourselves on, which is transparency and full auditability to our users.