Gold-Backed Cryptocurrencies Develop Premiums as Gold Demand Soars

Francisco Memoria

Cryptocurrencies backed by gold are starting to develop premiums as demand for the precious metal started surging after last month’s coronavirus-induced market crash.

According to CryptoCompare data, the premiums gold-backed cryptocurrencies like Tether Gold (XAUt), Pax Gold (PAXG), and Digix Gold (DGX) have been developing are accompanied by increases in trading volumes. The premiums have, over the last few days, ranged from 1-5% when compared to the price of gold’s .999 per Troy ounce spot price.

The spot price of gold has, over the last six months, surged from about $1,500 to $1,685, as fears surrounding the coronavirus outbreak started spreading and last month there was a major sell-off that saw most major .U.S. stock indices enter bear market territory. The precious metal is considered a safe haven, and demand for it has, as a result, been soaring.

Speaking to the press Mark O’Byrne, founder of the Goldcore firm, revealed dealers have been seeing large shortages of small gold bars and coins, noting “people want to buy, not to sell gold.” He added:

We have a buyers’ waiting list and we emailed our clients seeing who wished to sell their gold. At this time there are roughly only one or two sellers for every 99 buyers.

Demand has risen so much that gold-backed cryptocurrencies have started to develop premiums.  Tether’s XAUt token, the leading gold-backed cryptocurrency by market capitalization, is trading for $1,688 while the current gold spot price is of $1,685., having a rather small premium on it.

The Ethereum-based gold project Digix has a gold-backed DGX token that’s allegedly redeemable for 1 gram of gold. Each DGX token is currently trading for about $55.9. Acquiring 31 DGX tokens would cost more than $1,700, showing an even greater premium. Finally, PAXG is trading at $1,698.

Those who hold XAUt, PAXG, or DGX can allegedly redeem their tokens for physical gold. The premium, it’s worth noting, may be related to the costs associated with redeemed the precious metal, or with the trust put into the organizations behind the tokens.

Featured image via Pexels.

Ethereum Was Behind 85% of Dapps' $12 Billion Volume in Q2 2020

The total transaction volumes of decentralized applications (dapps) in the cryptocurrency space hit $12 billion in the second quarter of this year, rising by $4.5 billion compared to the first quarter. Etheruem dapps accounted for 85% of the volume.

According to DappRadar’s Industry Review report, there are more than 70,000 active wallets across 13 different blockchains interacting with the cryptocurrency space. The top blockchains were EOS, TRON, and Ethereum, with the latter representing $10.2 billion of the $12 billion volume seen in Q2.

Ethereum’s large transaction volume was partly fuelled by Compound and the launch of the COMP token, which led to a “yield farming” trend, in which users were interacting with the protocol as much as possible to receive COMP tokens. Compound saw $1.2 billion move through it.

The yield farming trend saw Ethereum gas prices and transaction fees increase, which according to the report did not stop Ethereum dapps from thriving in general. It did, however, contribute to an 80% drop quarter-on-quarter for ETH gaming dapps, as high gas prices are “killing” their activities on the cryptocurrency’s network.

Despite Ethereum’s growth, EOS and TRON (TRX) dapps have also seen their activity increase in the second quarter of the year. According to the report in only three months, TRON’s transaction volumes on decentralized applications surged by over 17,200%.

The rise was largely attributed to, a TRON-based version of the Compound lending protocol.  While TRON’s DeFi growth has been notably, DappRadar pointed out that most dapps on its blockchain are still in the “gambling” and “high risk” categories.

The EOS blockchain has still been enduring the effects of the EIDOS token airdrop, which put the network into “congestion mode.” The airdrop clogged the network and as a result, from 2019 to 2020 wallet activity on decentralized applications dropped 53%.

So far this year, $1.9 billion have been transacted on decentralized applications using the EOS blockchain, thanks to two dapps: Crypto Dynasty and Upland. DappRadar’s report also shows that two other blockchains are growing thanks to gambling dapps: WAX and ThunderCore.

Featured image via Pixabay.