Commodity Backed Stable Coins
November 19, 2022
The likes of fiat backed stable coins are the most commonly referenced type of stable coin in the crypto sphere. However, a cryptocurrency doesn’t need to be backed to fiat currency to be classified as ‘stable.’ Any coin, or token, can still be defined as stable, as long as it’s backed by a reserve asset. This includes a coin, or token, being backed to a commodity, such as precious metals, including silver, and gold.
There have even been coins pegged to the oil such as Petro (PTR), a cryptocurrency launched by the Venezuelan government, backed by the oil assets of the country. However, to date Petro isn’t available for purchases on exchanges outside of the South American nation. This is not to be confused with the unrelated PetroDollar (XPD), a token that saw its price soar back in 2018 when Nicolas Maduro, president of Venezuela, launched the Preto back in 2018, due to investor confusion.
With this in mind, when we talk about commodity backed stable coins, it’s really those backed by precious metals that get the most investor attention. This makes sense, because before gold was digitized in this way it either had a high barrier to entry, through over the counter trading, high risk, when traded through an EFT futures contract, and high storage costs, or the risk of theft associated with it, if purchased from a gold outlet.
To name a few tokens, Tether Gold (XAUT), DigixGlobal (DGX), PAX Gold (PAXG), Perth Mint Gold Token (PMGT), and Meld Gold (MCAU) are all backed by gold, whether the token represents 1g, or 1 fine troy ounce of gold. It’s worht noting that some of these tokens are more accessible than others.
If gold isn’t your thing, there are also tokens backed by other precious metals, such as silver. With SilverToken (SLVT) being an example of this. At the time of writing, each SLVT token represents 1.035732 ounces of investment-grade silver.
The exact way that each of these tokens operates differs from token to token. However, the one thing they all do have in common is that each of these tokens is directly backed by a commodity stored in a physical vault, and each token represents a set denomination of this physical asset. These tokens are also all similar in the way that they are redeemable for the physical metal it’s backed by. Although, this one is dependent on region, and where it can be delivered to. There may also be a minimum value requirement in place, as well as there being a possible delivery fees.
PAXG, the largest gold backed stable coin by market cap, can be purchased from a number of exchanges (CEX’s), including Nexo, and Crypto.com.
Commodity Backed Stable Coins
November 19, 2022
The likes of fiat backed stable coins are the most commonly referenced type of stable coin in the crypto sphere. However, a cryptocurrency doesn’t need to be backed to fiat currency to be classified as ‘stable.’ Any coin, or token, can still be defined as stable, as long as it’s backed by a reserve asset. This includes a coin, or token, being backed to a commodity, such as precious metals, including silver, and gold.
There have even been coins pegged to the oil such as Petro (PTR), a cryptocurrency launched by the Venezuelan government, backed by the oil assets of the country. However, to date Petro isn’t available for purchases on exchanges outside of the South American nation. This is not to be confused with the unrelated PetroDollar (XPD), a token that saw its price soar back in 2018 when Nicolas Maduro, president of Venezuela, launched the Preto back in 2018, due to investor confusion.
With this in mind, when we talk about commodity backed stable coins, it’s really those backed by precious metals that get the most investor attention. This makes sense, because before gold was digitized in this way it either had a high barrier to entry, through over the counter trading, high risk, when traded through an EFT futures contract, and high storage costs, or the risk of theft associated with it, if purchased from a gold outlet.
To name a few tokens, Tether Gold (XAUT), DigixGlobal (DGX), PAX Gold (PAXG), Perth Mint Gold Token (PMGT), and Meld Gold (MCAU) are all backed by gold, whether the token represents 1g, or 1 fine troy ounce of gold. It’s worht noting that some of these tokens are more accessible than others.
If gold isn’t your thing, there are also tokens backed by other precious metals, such as silver. With SilverToken (SLVT) being an example of this. At the time of writing, each SLVT token represents 1.035732 ounces of investment-grade silver.
The exact way that each of these tokens operates differs from token to token. However, the one thing they all do have in common is that each of these tokens is directly backed by a commodity stored in a physical vault, and each token represents a set denomination of this physical asset. These tokens are also all similar in the way that they are redeemable for the physical metal it’s backed by. Although, this one is dependent on region, and where it can be delivered to. There may also be a minimum value requirement in place, as well as there being a possible delivery fees.
PAXG, the largest gold backed stable coin by market cap, can be purchased from a number of exchanges (CEX’s), including Nexo, and Crypto.com.