Updated: Dec 20, 2019
DigixDAO stands for Digix Decentralized Autonomous Organization, which is in the process of creating a new cryptocurrency that is backed by actual gold bars. The participants make choices on how the Digix Global Ecosystem grows by holding DGD tokens. DGD enables the holders to vote on proposals, and execute power relating to governance on the DigixDAO Ecosystem.
DGD is not the only crypto-token launched by DigixDAO. DGX is another Digix token, which has its value tied to one gram of gold. Some DGX tokens represent other commonplace precious metals, such as silver and platinum.
This guide explains the purpose DigixDAO is designed for, the team behind it, the way it works, and various uses and applications.
What Is DigixDAO Designed For?
Bitcoin is often called digital gold. But, the term applies to DigixDAO crypto which has gold bars as a trading block. DigixDAO was created to make it easier for users to own assets in gold, bringing stability to the cryptocurrency ecosystem at the same time. This is done by backing DGD units with actual gold.
DAO has always been thought of as an ambitious project, which represents the original intent of blockchain from the time Bitcoin was created. Digix is attempting to take decentralization to new heights by offering incentives to participants, who vote and make better decisions.
The vision behind Digix to have partnered with Maker/DAI in the form of DigixDAO is to grow the Digix Ecosystem, through the application of decentralized consensus among DigixDAO (DGD) token holders. DGD holders are given rewards represented by DGX, where each token is equivalent to 1 gram of physical gold.
Who Is the Team Behind DigixDAO?
The Digix team is led by three founders - Kai C. Chng, Anthony Eufemio, and Shaun Djie. Chng is a former trader for HSBC, who left his job trading securities for furthering the usage of blockchain technology.
How Does DigixDAO Work?
Digix utilizes Proof of Asset (PoA) to distribute DGX tokens, representing 1g of gold to DGD holders. Possession of an asset is recorded on the Ethereum blockchain in the process, which in turn allows for the creation of PoA Asset Cards.
The asset cards are then certified using multiple sequential digital signatures from participants in the chain of custody, such as the Vendor, Custodian, and Auditor. These signatures of entities are further validated with proof of purchase and depository receipts, which are provided and uploaded onto the InterPlanetary File System, as a permanent record.
The Vendor is ValueMax Singapore, which is a publicly listed company known for selling London Bullion Market Associate certified gold bullion bars. Digix employs an independent Auditor, Bureau Veritas Inspectorate, to check the quality and quantity of the gold each quarter.
The Safe House is the participating Custodian Vault, which is located in Singapore. Their vault can store up to 30 tons of gold. However, in the future, Digix is looking to open more vaults around the world for ensuring regulatory redundancy.
The Proof of Asset Cards are stored on the Ethereum blockchain and contain the timestamp of card creation, bar serial number, SKU of the gold bar, a chain of entity digital signatures, purchase receipt, depository receipt, audit documentation, and storage fees due.
DGX tokens are in turn created by smart contracts that receive PoA cards for the generation of DGX tokens for each gram of gold.
What are Current and Future Applications of DigixDAO?
The primary purpose of DigixDAO token holders is to vote on how the funds should be allocated. DGD token holders can take active managerial decisions on any proposal submitted to DigixDAO. They are effectively chairman and board members with voting rights.
As per the DigixDAO website, holders of the DGD token get a prorated share of transaction fee on Digix Gold, which is denoted in DGX gold tokens. However, these rewards shall only be generated quarterly and made available to DGD holders. Also, the rewards are only for those holders and participants, who actively vote on proposals or contribute to the Digix ecosystem.
DGD is a tradable token. Binance and Huobi host the major share of its trading, but popular exchanges like OKEx also hosts the crypto. DGD is an ERC20 token and its mining is not supported on the network. The plus side is that the tokens can be stored in any wallet that supports Ethereum storage.
A common issue in the crypto universe is that the value of coins and tokens is too volatile. By tying the value to Gold, DigixDAO promises a secure future to its holders. DigixDAO is valuable since it allows for an inheritance solution. This means that the accumulated wealth would not vanish even if the DGD holder passes away.
There are several updates planned by the team in the future, including the use of DGD tokens in games and as an escrow service.