Today SEAC had a Q&A round with Brian Hankey Co-Founder of CACHE Gold, a gold-backed ERC-20 token that launched for public trading on Bithumb Global just recently on the 9th June 2020 and we wanted to reach out to find out more about the product and what makes it tick.
1) What is CACHE?
CACHE is a blockchain technology company that tokenizes physical assets. Our first product is CACHE Gold, a gold-backed ERC-20 token.
2) What is CACHE Gold’s business model:
CACHE’s business model is the tokenization of physical assets and redemption of those tokens. CACHE Gold is our first product. CACHE earns fees for storage and redemption of tokens but leaves other aspects of the ecosystem to partners who know their respective businesses best such as Gold Dealers like Dillon Gage, vault’s like Brink’s and Loomis and digital asset exchanges like Bithumb.
In this way we hope to make CACHE Gold highly scalable and to eliminate any single point of failure in the same spirit and philosophy as blockchain technology itself.
We have many potential customers and markets. Precious metals investors who are looking for a more cost efficient alternative with superior transparency. Cryptocurrency traders interested in diversifying into precious metals or those that want access to fiat liquidity through CACHE’s redeemability. Gold dealers or investors who want to move metals from one location to another without having to ship it or sell it and buy it back. Financial institutions that want to build complex products while providing full transparency about the underlying assets. There are also undoubtedly many use cases and markets we haven’t even thought of yet.
3) How is CACHE Gold different from other gold tokens?
There are many ways that CACHE Gold differs from other tokens but the three key differences are:
1) More transparency, we provide lots of data on every bar backing CACHE, including photos, gross weight, purity, brand, serial number and location. All of this data is provided in real-time and it is provided by the vault personnel that are actually handling the bars. The data is then hashed and broadcasted to the Ethereum blockchain so that it cannot be manipulated in any way without detection.
2) Redemption, we allow redemption in multiple jurisdictions for multiple types of bars as small as 100 grams (~$5,500) as opposed to 400 oz good delivery bars (almost $700,000 at current market). Tokens can be redeemed for USD or for the physical bars. We can actually support smaller bars and even coins but due to their higher premiums they are not ideal for tokenization.
3) Scalability, by working with multiple liquidity providers and multiple vaults, CACHE is scalable and global. We limit our role to simply tokenizing gold and redeeming tokens for gold while leaving all other aspects of the system to industry leaders like Brink’s and Loomis for storage and Dillon Gage for purchase and sales of underlying.
4) Who are your partners?
Dillon Gage, one of the largest gold distributors in the US, trading billions of dollars of metals per year, is a shareholder in CACHE and also a partner that provides liquidity and storage services. Additionally, Loomis and Brink’s also provide storage services to CACHE.
CACHE also has partnered with Onchain Custodian to provide insured, third-party custody for CACHE gold tokens.
And of course, Bithumb Global, which provided the first public listing for CACHE Gold.
We will be signing and announcing new partnerships tuned, please stay tuned to the news section on CACHE’s website.
5) How do token holders know they can trust CACHE?
At CACHE, we always make every effort to design things in such a way that you don’t have to trust us. We make as much information public as we possibly can. Specific to the underlying gold and the vaults: The vaults are trusted because they audited and insured and are known industry players with decades of industry experience and stellar reputations. They are also audited and insured and store billions of dollars of precious metals for individual and institutional investors alike. Additionally we use GramChain RFID tracking which provides bar photos, weight, purity, brand/refiner, location and an entire event history all broadcasted to the Ethereum blockchain in real time. This data is provided directly by the vault personnel and not by CACHE. This ensures that CACHE cannot manipulate or delete data without being detected. All of this data is always public and available in real-time. For more information we created a short video about trust:
We have also had a smart contract audit by Zer0Trust: .Audit PDF
6) What is one CACHE Gold token worth and what can I do with it?
One CACHE gold token is always worth one gram of pure investment-grade gold, therefore, in fiat-currency terms, it’s always worth the spot price of gold. CACHE Gold tokens are always redeemable for physical gold and can also be redeemed for fiat currency by selling the redeemed to gold to one of CACHE’s participating gold dealers such as Dillon Gage.
You can also trade tokens on centralized exchanges like Bithumb as well as decentralized exchanges.
Or, you can simply hodl your CGT as an investment the same way you hold gold bars as an investment.
For more information about what you can do with CACHE Gold, please see this video:
7) What fees does CACHE Gold have and why do token holders have to pay fees?
CACHE Gold charges a 0.1% (10 basis point) transfer fee and a 0.25% (25 basis point) annual storage fee pro-rated daily.
These fees are fixed in the CACHE Gold smart contract and can never be increased.
The reason we need to have fees is that it costs money to store physical gold bars in secure, insured, audited vaults. There is no way around this. We believe the fees are reasonable and even small compared to many alternative gold investments and that the long term-gains from holding gold far outway the fees.
We also believe that any token backed by precious metals that does not have a storage fee will not be sustainable and also that this would create a perverse incentive to not actually back the token 100% since the larger the supply of tokens, the larger the storage fee.
Fiat-backed tokens don’t have this issue because their issuers are depositing the underlying asset at a bank and receiving interest on it, however these deposits are with fractional reserve banks and therefore not comparable to 100% allocated, segregated gold bars stored in a vault.
There is no way around the simple fact that storing physical assets in secure vaults costs money, however, the last 100 years of history has shown that gold gains far more than 0.25% in fiat-terms and in fact has appreciated an average of 4.2% per annum.
8) Do you have plans to create tokens backed by other precious metals?
Our first objective is to grow CACHE Gold’s supply and adoption. In the longer-term we are definitely considering creating other tokens backed by other metals and perhaps even completely different types of assets.
We certainly wish you and the team every success in the future as this starts to pick up speed.
If you need to know more about Cache Gold you can contact their Customer Services team via their website.
**SEAC does not endorse the products/services that the interviewees offer. Our website Q&A is merely to encourage the discussion of topics and exchange of views for education and knowledge.