DigixDAO Dissolution Will Proceed but DGX and Digix Here to Stay
Stepping back and being cautious in the face of uncertainty is what a savvy investor does. There is Bitcoin, whose proponents say it is the next “gold”, whose value is attributed to scarcity and cryptography. They couldn’t be far from the truth.
Scarcity is one of the many properties that give real physical gold its timeless value. But what if one could own smart gold? That is, audited and verifiable 99.9% LBMA-certified gold tokenized, fluid, tradable in small quantities.
Digix is Reinventing Gold as we Know
That’s now possible through Digix and its token, DGX. It is an ERC-20 utility token, a physical representation of gold, that can be traded for other tokens. Besides, its underlying asset is a cushion for investors seeking to preserve their assets during political turmoil or economic crises. At spot rates, each DGX token, which equals one gram, is changing hands at 50 DAI, approximately $50.
By using the immutable, publicly accessible and transparent blockchain, Digix is reinventing gold as we know. They are actively democratizing access, aware that each gold bar is expensive. Prices fluctuate in line with demand. As investors shift to safe trusted assets, the price of the yellow metal has been maintaining a steady uptrend, soaring past $1,500. Analysts say prices may surge to $2,000 by the end of the year.
With the tokenization of gold, investors have an edge and flexible. They are assured that their gold is safely stored in vaults in Singapore and Canada. DGX is minted only when gold is added to their vault and provenance is via the blockchain.
For those willing to redeem their tokens for gold, they can comfortably do that cheaply at the Digix store in Singapore. ValueMax is Digix’s gold bullion provider and one of the oldest pawnbroking chains established in 1988.
Meanwhile, The Safe House, a subsidiary of Silver Bullion–a member of the Singapore Bullion Market Association (SBMA), provides custodial services. It is described as a “provider of comprehensive and competitive solutions for corporations and high-net-worth individuals looking to purchase, transport, and store precious metals.” Bureau Veritas audits its gold reserves.
The DigixDAO—What is Served
The DigixDAO was an autonomous, smart contract-controlled organization that stimulated the growth of projects and ecosystems around the DGX token.
For their participation in governance, DGD token holders were awarded. Proposals that received maximum support from the community received funding from the organization. DGD holders could vote on these proposals. Also, DGD holders could receive fees related to DGX trading.
The platform was launched in March 2019 and by November 2019, 50 projects had been submitted with the objective of growing the DGX ecosystem, subsequently increasing demand for the gold-backed token. Approximately 386k ETH coins were held by the autonomous organization.
Project Ragnarok and Subsequent Dissolution
Despite the growth, DGD voters proposed for a dissolution mechanism of the DigixDAO. This paves the way for disgruntled DGD holders to make a clean break, stepping away from the project, via integrating Project Ragnarok. In November, through a medium post, Kei Cheng, the CEO, said:
“Although transferring ownership of DGDs has always been an option, other suggestions were put forward, ranging from a smart contract to allow DGD token holders to ‘burn’ their DGD in return for a proportion of ETH in DigixDAO, and even a call for a full dissolution of DigixDAO.”Kei Cheng
Further explaining that they are against the dissolution, but should the vote pass, then:
“After unlocking their DGD from DigixDAO, DGD token holders will be able to claim a prorated portion of remaining ETH in DigixDAO depending on the amount of DGD they hold. The amount of ETH available for a claim would be taken as at the end of the current DigixDAO Quarter.”Kei Cheng
Decisively, members have followed through by voting overwhelmingly in favor of the dissolution. This grants permission for DGD holders willing to break away to receive their funds from the Digix ICO treasury. 95% of voters approved the creation of the dissolution mechanism.
The 2016 ICO
An initial coin offering was done in 2016 when over 450k ETHs were raised to actualize the project’s objectives. Investors will receive 0.193 ETH per DGD token. All funds from the treasury will be reimbursed via a DigixDAO Refund Contract. DGD holders will receive ETH at the end of Q1 2020. Notably, though the dissolution of the DigixDAO doesn’t mean the end of Digix or DGX. It only paves the way for DGD token holders to exit to ETH. Following the decision, DGD prices in secondary markets surged, and there is an opportunity for arbitrage as the ETH/DGD rate at Binance is 0.180 ETH. This is arbitrage stems from the likelihood that the Digix team didn’t expect voters to approve the integration of the mechanism.