AGORACOM Small-cap Investor Relations Blog

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London Startup Aurus Launches Gold-Backed Crypto Token, Possibly Opening The Gold Market To New Investors

• Stablecoins offer the potential for crypto to be used as day-to-day payments because their value is pegged to an underlying asset, where price stability is more consistent. 
• Still, the middleman sitting in-between buyer and seller exists to exchange digital assets into traditional fiat currency

By: Robert Anzalone

The idea that crypto coins can be used for everyday goods and services is not a reality, yet. Stablecoins offer the potential for crypto to be used as day-to-day payments because their value is pegged to an underlying asset, where price stability is more consistent. Still, the middleman sitting in-between buyer and seller exists to exchange digital assets into traditional fiat currency. Typically, stablecoins, like Paxos or USDT, are used in the crypto market as hedging instruments or as value stores. Payment pipelines for everyday purchases are essential, and only when seamless integration is a reality can the public reap the benefits of a more streamlined infrastructure, as some blockchain purists promise. When we examine what is under the hood of our payment systems, we can see where blockchain innovation could transform older infrastructure into something better. 

If we look at the evolution of stablecoins as an innovation in payments, how they are regulated and hold value creates new risks for investors. Stablecoins have been criticized over the past year as potentially not being as price stable as believed. However, the market for this type of security has grown significantly and is becoming more crowded with new coins. Are stablecoins something worth integrating into our economy? How does the crypto industry design a way where decentralized technology creates an independent and non-controlled currency that can be used for everyday transactions? Can the reality of digital gold be achieved and utilized as a form of payment? 

Aurus – newly launched – has created a form of tokenized gold, and represents an actual ownership stake in physical gold. This adaptation is an innovation from existing stablecoins that could decrease the middleman footprint and could expand the traditional gold market.

I interviewed Guido Van Stijn, who is the CEO of Aurus. Aurus is a software company that provides tokenization-as-a-service (TaaS) that enables the gold market to autonomously tokenize their gold into AurusGOLD (AWG). Mr. Van Stijn explained that each AWG token is collateralized and redeemable for 1 gram of physical gold. As described to me, AWG will not be controlled by a government and exists as an ERC-20 token. The claim being regardless if Aurus survives as a company, the gold-backed token will survive on as an asset, just as a gold bar would. This is a unique approach to tokenization because each coin is traceable to a specific gold bar registration. Unlike ownership in a gold exchange-traded fund, which is an equity and does not represent physical gold ownership, AWG states that it is actual gold ownership.

Using a tokenized asset like a gold-backed token could be a benefit to the traditional gold buyer. The AWG tokens are sold at just a fraction above the gold spot price. Mr. Van Stijn explained, “Our processes are different than other gold-backed projects. All gold-backed stablecoins currently on the market have a centralized minting process. Meaning the company itself will, at some point, hold the gold. By digitally replicating the traditional gold market, Aurus is the first project to create a self-sustaining ecosystem made up of gold providers, vaults, and distributors that work together to produce a semi-decentralized gold-backed cryptocurrency.”

To allow the self-sustaining ecosystem to exist, Aurus circulates a second hybrid utility token, AurusCOIN (AWX). Mr. Mark Gesterkamp, the Business Development Director for Aurus, said, “AWX is limited to a total supply of 30,000,000 units, deriving transactional fees from the usage of AWG. AWX offers investors the opportunity to buy into the future growth of Aurus.” Mr. Van Stijn said, “As people around the world trade AWG, 70% of all the generated transaction fees are proportionally distributed across all AWX holders (paid in AWG). The remaining 30% of the generated fees are allocated towards the ecosystems’ operational costs as follows: 15% to gold providers, 15% to vault partners.” For the first time, market participants can generate a passive income stream on the bullion they sell.  

Who wants gold when you can have Bitcoin?

There is nothing special about gold-backed stablecoins in crypto. But Aurus has created something different that bridges the gap between traditional gold trading and the crypto world. More importantly, access to the gold market can be achieved without the need for gold brokers. The claim made by Mr. Van Stijn is that his method lowers the barriers of entry for public gold investment.

Tony Dobra, who sits on the Aurus advisory board, formally a general manager of Baird & Co., believes that AWG is unique. Mr. Dobra said, “While it is not the only gold on the blockchain, it is the most truly gold-based trade available in crypto. Via the AWG cryptocurrency, producers, refiners, and traders can tokenize their gold in multiple locations of their choice and trade the underlying gold on several platforms and exchanges. Because there are multiple locations, providers, and traders, the best price can be obtained. You are not limited to just one location or one price provider.”

Aurus expects and is working to achieve a state where AWG will create more liquidity in the gold market. More importantly, the team at Aurus explained their main goal is for AWG to be used for everyday transactions, i.e., have AWG be used like cash for everyday purchases. While there is a long way to go before this is a reality, the Aurus project seems to be a shift in the direction of asset-backed digital currency. If this works, commodity and precious metal trading could be influenced to follow suit. As for use in payments, stablecoins like AWG, still require an exchange mechanism at the point of sale. Time will tell if this style will become publicly adopted.

Source: https://www.forbes.com/sites/robertanzalone/2019/12/09/london-start-up-aurus-launches-gold-backed-crypto-token-possibly-opening-the-gold-market-to-new-investors/#1049f0027a98

SPONSOR: ThreeD Capital Inc. (IDK:CSE) Led by legendary financier, Sheldon Inwentash, ThreeD is a Canadian-based venture capital firm that only invests in best of breed small-cap companies which are both defensible and mass scalable. More than just lip service, Inwentash has financed many of Canada’s biggest small-cap exits. Click Here For More Information.

5 Crypto Projects That Crushed It in 2019

• Crypto startups that shrugged off bearish market conditions, community apathy and industry in-fighting, and focused on shipping clean code and great products.
• There’s a lot of noise in the cryptosphere, but the following projects cut through it like a knife, delivering original solutions with genuine utility.

As 2019 nears its apex, it’s time to take a look back at the projects that crushed it this year. Crypto startups that shrugged off bearish market conditions, community apathy and industry in-fighting, and focused on shipping clean code and great products. There’s a lot of noise in the cryptosphere, but the following projects cut through it like a knife, delivering original solutions with genuine utility. Having killed it all year, you wouldn’t bet against this quintet doing it all over again in 2020.

1. LiquidApps

EOS scaling project LiquidApps emerged out of nowhere to garner industry-wide plaudits as 2019 reached its crescendo. A lot of this was due to the success of its DAPP Network, which demonstrated that it’s possible to provision off-chain/sidechain scaling without compromising on decentralization. The DAPP Network’s vRAM enables EOS dApp developers to access cheap virtual storage, giving them the ability to scale their decentralized applications without being stung by prohibitive resource costs. That alone would be enough to sustain most crypto projects for a year, but LiquidApps accompanied this breakthrough with a tool for seamlessly onboarding new dApp users, another for linking blockchains into a single dApp, and an oracle service. Impressive stuff.

1. Remme

Distributed Public Key Infrastructure (PKI) project Remme boasts one of the hardest working teams in crypto. After realizing that its PKI-enabled blockchain simply wouldn’t cut it on Hyperledger Sawtooth, the Remme team made the difficult decision to switch chains deep into the project, transitioning to the EOSIO codebase and rolling out its testnet. Rather than letting this throw them off their stride, Remme has charged ahead with its mainnet launch, taking time out to propose improvements to EOSIO where errors were encountered in the codebase, and fine-tuning the workings of its custom Block Producer program.

This year, Remme also succeeded in onboarding hundreds of enterprises to Keyhub, its all-in-one platform for managing SSL/TLS certificates. With its mainnet just weeks away, 2020 is shaping up to be a big year for the Ukrainian blockchain startup.

1. Matic Network

It would be impossible to review 2019’s biggest breakout successes without including Matic. While the meteoric rise of its token in recent weeks, following its April IEO on Binance, has kept investors happy, that’s merely a symptom of its success in becoming the industry’s blockchain scaling solution of choice.

While Ethereum remains mired in ETH problems, Matic has emerged as a genuinely scalable and production-ready chain that can take the strain. Its adaptation of Plasma enables instant on-chain payments and transactions, making it suitable for everything from dApps to DEXs. Dozens of crypto projects have announced their migration to Matic Network including a number specializing in NFTs such as Battle Racers. In 2020, expect this trickle to transform into a torrent as crypto projects migrate en masse.

1. Chainlink

If there’s any token, outside of exchange tokens, that investors wish they’d stacked up on in January, it’s LINK. Up 570% in 12 months, LINK will go down as one of 2019’s best buys. As with Matic, however, focusing on price misses out on the broader story. Much of Chainlink’s success comes down to mastering the other P – partnerships. This year, crypto and non-crypto businesses alike rushed to team up with Chainlink, utilizing the smart contract and oracle network for connecting off-chain data feeds and enabling tamper-proof inputs and outputs.

With names such as SWIFT, Google, Gartner, and IC3 all working with Chainlink, the project founded by Sergey Nazarov has become the first crypto startup to transcend the industry and embed itself in the broader business world.

1. Synthetix

Warranting the accolade of most innovative defi project of 2019, Synthetix is a smart solution whose best is yet to come. Decentralized synthetic assets have long been the holy grail of many decentralized finance advocates, unlocking the ability to permissionlessly trade commodities, forex and cryptocurrency on DEXs. Synthetix is the first project to realize this goal through its pioneering use of ‘synths,’ tokens that provide exposure to assets such as gold, TESLA stock, and AAPL, without liquidity limitations. Up an incredible 1,715% to date, despite being absent from tier one exchanges, the SNX token looks like it has more room to grow – as does the Synthetix Network it powers.

Source: https://www.newsbtc.com/2019/12/03/5-crypto-projects-that-crushed-it-in-2019/

SPONSOR: ThreeD Capital Inc. (IDK:CSE) Led by legendary financier, Sheldon Inwentash, ThreeD is a Canadian-based venture capital firm that only invests in best of breed small-cap companies which are both defensible and mass scalable. More than just lip service, Inwentash has financed many of Canada’s biggest small-cap exits. Click Here For More Information.

Zero-Commission Trading Is Coming to Crypto

• ShapeShift exchange debuts zero fees following user defections
• Firms are slashing fees as race for market share intensifies

By Olga Kharif

Zero-fee trading first came to exchanged-traded funds and then to online stock and option transactions. Now the strategy is spreading into the cryptocurrency sphere.

Seen as the most profitable sector of digital-asset world, trading platforms are feeling the pressure as industry heavyweights such as Binance Holdings Ltd. and BitMex grab market share with both trading volume and coin prices sagging. ShapeShift, which has operated an exchange since 2014, said Wednesday it’s begun offering free “perpetual” trades.

“Free trading has become a feature of all fintech direct trading offerings, from Robinhood to SoFi and even JPMorgan,” said Lex Sokolin, global financial technology co-head at ConsenSys, which offers blockchain technology. “So it’s not surprising that in a digital race to acquire the most users, execution prices are starting to collapse.”

The practice turned out to be a catalyst for Charles Schwab Corp., which recently reported it opened 142,000 new trading accounts in October, a 31% jump from September, after the brokerage offered zero fees. Fresh income is being generated from interest earned on client cash holdings. Firms in the crypto world are taking notice.

“We’ve definitely seen how people often need very simple messages,” Erik Voorhees, the Denver-based chief executive of ShapeShift, said in a phone interview. “Everyone understands free.”

ShapeShift lost about 90% of its trading volume a year ago when it began checking user identifications to comply with regulatory guidelines, Voorhees said.

Daily-trading volume in crypto overall is about half of what it was in late October, and it’s been sluggish for most of the past few months, according to data compiler CoinMarketCap.com. The percentage of exchanges that are offering no-fee trading has increased to about 10% from 8% in June, data from CryptoCompare, which tracks exchanges.

To execute free transactions, traders will have to use so-called Fox tokens that ShapeShift is rolling out. Every user ShapeShift.com will get 100 free tokens, and the exchange may sell additional ones, Voorhees said. Each token — which are deposited in a user’s crypto wallet and are never spent — provides $10 of free trading volume on a rolling-30-day basis. So the more Fox tokens customers hold, the more free trades they can execute. Voorhees estimates that 90% of the exchange’s users will be able to do all their trades for free.

“We’d rather make a smaller amount of revenue from a larger pool of customers, and get those customers off centralized custodial exchanges,” Voorhees said. “It’s a risk we’re taking, but we think it’s worth it.”

Other, mostly smaller, exchanges are offering zero fees as part of short- and long-term promotions. Liquid.com is waiving costs for traders who have less than $25 million per month in transactions. Zebpay introduced zero-trading fees in February. HitBTC lowered its fees in August. Malta-based Binance — often the largest spot trading exchange — lets users lower their trading fees by investing in its own cryptocurrency, Binance Coin.

“The end result of price wars tends to be consolidation and the starving of smaller players,” Sokolin said. “Already we see this with the dominance of Binance.”

Source: https://www.bloomberg.com/news/articles/2019-11-20/zero-commission-trading-is-coming-to-crypto-as-boom-times-fade

SPONSOR: ThreeD Capital Inc. (IDK:CSE) Led by legendary financier, Sheldon Inwentash, ThreeD is a Canadian-based venture capital firm that only invests in best of breed small-cap companies which are both defensible and mass scalable. More than just lip service, Inwentash has financed many of Canada’s biggest small-cap exits. Click Here For More Information.

Key Investment Themes In Crypto Networks

By: Matt Spoke

I’ve been an entrepreneur in this wild cryptocurrency industry for over 5 years. My focus has been on leading a team of core developers to build an open decentralized protocol that solves real problems for real users. I’m not alone in this endeavour. There are at least a few dozen of my peers leading projects with broadly similar goals.

To the outside world, we’re all crypto geeks building alternatives to Bitcoin. That said, there are nuances in the designs and goals of various projects that form the basis of some early investments theses that leading funds have adopted to guide their selection criteria when looking at digital assets.

Without getting into all the specifics, for the purposes of this article, I want to focus only on the specific digital asset classes that are native to their own networks or blockchains, rather than tokens built into “dApps” or other similar models.

The reason this is important is because there are an increasing number of funds, both institutional and not, that are looking at digital assets as the next asset class to include in their diversified portfolios that include everything from public equities, to real estate, to gold, to bonds and other instruments. Who knows, maybe the next time you check your pension, your favourite digital asset could be in it.

As such, it’s helpful to have a standard way to think about the differences and similarities among digital assets, such that they can be categorized for investment decisions.

To the outside looking in, this industry can be extremely opaque to understand and evaluate. How value will be created, on what time horizon and how does one form opinions on the quality of the project they’re looking at. While there is infinite nuance between projects, protocols, dApps, etc., most digital assets fall within common buckets, that have formed the informal standard crypto theses. This mental model is helpful for any observer, technologist or fund that has been researching or thinking about allocating capital or time into this industry. It also might help us understand new opportunities for value that fall outside of these established categories (more on this later).

In speaking to a prominent investor in the cryptocurrency industry recently, he summarized this very simply:

“I understand and believe in Bitcoin and Ethereum. Everything else is just playing copy-cat and trying to play the same game.”

In a broad sense, this is generally how the industry has evolved. Bitcoin became dominant, and then many built alternatives (“alt”-coins) broadly solving for a similar goal, and then Ethereum introduced a new type of protocol that was quickly followed by its own inspired alternatives – something that Chris Burniske of Placeholder Ventures refers to as “Ethereum Killers”.

The funds investing in this industry have had to build their theses around this reality. As such, you’ll often find funds with a deep conviction for Bitcoin and Ethereum, and then, to a lesser extent, a series of “hedges” into alternatives that could grow in relevance and in some cases potentially overtake the projects that first inspired them. Many of these alternatives have taken different technical approaches, but in general seek to solve the same problem and target the same ‘blockchain-converted’ developer or investor audience.

These investment themes behind Bitcoin and Ethereum are similar in that they are both digital assets, but they’re different in the problems they seek to solve.

Bitcoin established a category of digital assets that Multicoin Capital likes to refer to as “Global, State-free Money”. This theme focuses on a growing need for a global form of money that is independent of institutional trust and provides a digital alternative to gold. The need for such an asset is to address the >500m people in the world who live in countries with greater than 10% inflation, and to provide a place for people to store their wealth that is safe from seizure and “portable” across geographic boundaries.

Although it’s unclear how to measure the size of that addressable market, the thesis implies a multi-trillion-dollar opportunity in this category.

Ethereum, on the other hand, professed to be building a “world computer” or in other contexts, the basis for a “decentralized internet”. This category of digital assets known as “decentralized internet” projects is what primarily caused the run up of the ICO markets in 2017-2018. Believers in this thesis argue that the causes of many of the inequities online today stem from the overly “centralized” nature of the internet’s infrastructure, such that incentives lead towards monopolization of online services – think Facebook and Google. As such, there is a massive interest in owning a piece of the “fuel” that will power the renewed internet infrastructure of the future.

On top of this thesis are companies building utopia as they see it. These ideas range from a system of finance that is open and alternative to banking, a system of identity independent of governments, to other lofty and worthy ideas that would find their homes in the “decentralized internet” category.

Within these two broad categories, there are nuances and further sub-categories, but at the highest level, this is a helpful frame to better understand where a particular project fits, and what alternatives it should be compared against. This framing should also help to better understand why Bitcoin and Ethereum are fundamentally not competing technologies, but why EOS, Tron, and Cardano have yet to prove why they’re contenders to supplant Ethereum, their category king. As with categories in other online industries, we’ll likely see a market where 75% of the value is dominated by the category leader, and the rest spread among its competitors.

With 25-30+ launched or soon-to-be live networks looking to compete in Ethereum’s category, its quickly become saturated. At the current state of adoption in our industry, we’re nearing an oversupply of novel technical solutions and a real need for actual usage. Networks have collapsed into mirror-like narratives (build a dApp here!), use cases (build DeFi here!), and are all seemingly speaking to the same audience.

So when looking at how this market might evolve, the real breakthroughs will likely lie with projects that have a disproportionate chance of dominating these two categories or projects that define a brand new category with massive market potential. More on this next week.

Source: https://www.forbes.com/sites/mattspoke/2019/10/30/key-investment-themes-in-crypto-networks/#78f4be1d3774