Gold-backed crypto platform Digix and decentralized Ethereum blockchain-based loan platform ETHLend have announced a mutual partnership that will create new use-cases and investment strategies for future DGX token users plus value stability for ETHLend platform users.
The partnership consists of R&D collaboration, shared products and functions as well as combined efforts to educate and inform more people about the possibilities of business on the blockchain.
The suitability of the DGX token on the ETHLend platform has already been tested successfully with test loans being collateralized by the gold token on the Kovan public test net.
Digix is one of the first proofs-of-concept on tokenizing valuable real-world assets on Ethereum, and still intends to be the first to launch a fully trackable and auditable crypto gold token.
In short, DGX tokens contain the right to 1 gram of gold that is stored in an audited vault. Therefore, the value of the tokenized gold can be easily traded or pledged against a loan without moving the physical gold repository while having the assurance through their Proof of Asset protocol. This digital gold standard provides more flexibility to investors that are trading in physical gold.
Moreover, unlike many digital tokens whose value is based on speculation on a blockchain startups future, DGX tokens are subject to the price of real gold. Therefore, these tokens can be useful in situations where an investor aims to avoid volatility, while still having the benefits of owning a digital good.
Worth noting is that earlier today ETHLend successfully concluded their presale selling out of LEND tokens in 77 hours with 2,000 ETH raised.
ETHLend is a decentralized peer-to-peer application that is running on the Ethereum network. ETHLend is developing a global lending market that connects lenders and borrowers from all over the world. ETHLend offers secured loans with the use of ERC-20 compatible digital tokens as a collateral. The application is ideal for token holders who are in need of liquidity and all those who want to participate in a free lending market. Instead of selling and closing a token position, a borrower can easily pledge digital tokens to receive Ether.
ETHLend is additionally adding a function to tie Ether loans to fiat currencies to avoid volatility and allowing familiar loan agreements for everyone while keeping all benefits that separate blockchain technology from traditional banking: fast transactions across borders, transparency for all parties, and safety-by-design through self-executing contracts, known as “smart contracts.”
DGX will be the first token listed on the ETHLend platform. This means that a borrower who is willing to pledge a DGX token on ETHLend does not need to provide a smart contract address of the token. Instead, such information is readily available on the application.
Since digital tokens bear volatility which must be taken into account, ETHLend will also categorize the volatility of different tokens and map the results for users to understand the inherent risk of volatility. Such categorization is beneficial for the safety of loan participants and it highlights the power of asset-backed tokens such as DGX.
Also, ETHLend will seek to incorporate a collateral-swap option, to allow on-platform asset swaps to low-volatility tokens, such as DGX, if the collateral value is dropping below a certain threshold in the middle of the loan.
ETHLend shall also be developing a smart contract on the Kovan testnet to research the topic of token lending. ETHLend has received plenty of requests for lending tokens for different strategies such as short selling or hedging. DGX would also be the token of choice for a stable lending basis. ETHLend plans to adopt token lending on the live application if the community continues to express the need for it.