Please consider CACHE Gold. We have submitted a proposal here which outlines all the reasons that CACHE Gold provides a superior gold-backed token.
Although PAXG is the current market leader in terms of listings, their aggregate volume is upwards of $1 million per day, most of their individual markets are fairly illiquid and/or with large imbalance between buys and sells. The price variance between exchanges is also huge - currently $1,830 to $2,070 (not including Uniswap). Redemption should provide an arbitrage opportunity but due to the high minimum redemption of 430 troy ounces but it doesn’t because it doesn’t seem possible to purchase 430 PAXG (~$832,000 USD at current gold spot) on any exchange at anywhere near the spot price.
PAXG and XAUT also have transparency issues.
Lastly, scalability and sustainability seems to be an issue with PAXG and XAUT. Neither has a mechanism to collect storage fees, while storing gold in audited, insured vaults always has a cost. The larger the token’s market cap, the larger this cost becomes. If token holders hoard tokens and do not transfer them, no revenue is earned on the tokens with which to pay the storage fees. CACHE Gold solves this problem (as well as others) by implementing a small 0.25% per annum storage fee.
Although nobody likes to pay fees, and fees can be a hassle for developers, we feel it is necessary to maintain scalability and sustainability of the token. As asset backed tokens gain adoption, platforms and token holders will need to come to terms with the fact that secure storage of real, physical assets has a cost that must be paid.
We agree that gold would be a great addition to lending platforms and it would provide small retail investors with the opportunity to earn interest on their gold holdings - something that has previously been difficult if not impossible to do for most retail investors.