ADVANTAGES
Backed by Real Assets
Coin holders have choice to an asset that is physical and backed by real worth. They can convert these assets at the conversion rate to take ownership of real assets.
Stability
The price of the commodities is comparatively stable and so would represent a good essential asset for a stable coin.
Liquidity
The tokenization of commodities carries greater liquidity that enables better price discovery.
DISADVANTAGES
Centralized
Third-parties such as the vendors, custodians and the project itself is needed to ensure the full-functioning of the system and increases the risks of a single point of failure.
Audit
An audit process is an expensive and time-consuming process that underscores the capabilities of a decentralized blockchain.
Here are some of the most popular commodity-backed stable coin:
DIGIX GOLD TOKENS (DGX)
DGX is an Erc-20 token backed by physical gold that has been fully audited and is stored in a vault in Singapore, known as The Safe House. DGX is fully redeemable at any point of time.
The price of each token is fully reliant on the market price of gold. DGX is based on the Proof-of-Provenance algorithm where each gold bar is secured and its ownership/custodianship status is tracked accurately on the Ethereum blockchain. DGX is scheduled to be audited each quarter (every 3 months), which is a positive indicator.
DGX is created by a company called DigixGlobal. Fascinatingly, the Digix team created two tokens, Digix Gold Tokens (DGX) and DigixDAO Tokens (DGD).
DGD tokens are used as a form of support in DigixDAO’s control system to grow DGX’s adoption.
At this time, DGX tokens are largely used as collaterals and trading pairs by other crypto projects such as MakerDAO, Kryptono Exchange, Kyber Network, WeTrust, Monolith and many others.
The Digix team was formed way back in 2014 and includes the former CEO of Fujitsu Asia, Teo Hye Chng, as their chairman.
Tiberius Coin (TCX)
It is backed by not one commodity, but by a combination of 7 precious metals commonly used in technology hardware. The idea is that as these metals are increasingly used to make technology such as solar panels and electric cars, TCX coins will go up in value.
