Opinion by: Kevin Rusher, founder of Raac
It’s a volatile world there. This year, we saw stocks take a wild ride while gold has pumped and the crypto was caught somewhere in the middle. Investors threw assets at risk and rushed for shelters. Gold leads the charge.
Although gold is safe, he does not work very hard. Unlike species and treasury vouchers, yellow metal does not generate income. Now, more than ever, investors must be able to earn a gold yield – in particular in the decentralized finance sector (DEFI).
The only way to earn silver with gold is to buy low and sell high. Most investors do not tend to buy gold like that. It is for a good reason – in the long term, Gold’s performance is generally consistent, if not without a few peaks and hollow here and there, as we have recently seen.
For example, after the 2008 financial crisis, the price of gold climbed by 148% but stagnated for almost a decade before the Pandemic of Covid-19 will trigger another rally, and it is likely that we will see Gold Hold, if not fall from its new record, once the markets revive. Although there is an excellent hedge, the long -term history of Gold are not a history of growth.
Investors prefer American Treasurys or high -performance savings accounts as part of a balanced portfolio. Although gold can surpass these assets in uncertaintime, it offers better safety balance and long -term foreseeable income.
The DEFI solution
This is where Defi brings innovation to the oldest asset in the world. DEFI can considerably modernize gold investment, offering the speed and transparency of blockchain -based transactions and the possibility of gaining yields.
Currently, however, most of the tokenized gold is almost the same as keeping it in a fund negotiated on the stock market (ETF). The giants of the Stablescoin as Tether and Paxos launched golden back tokens, which, according to them, are entirely supported by physical and verified gold reserves, but do not offer any return.
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Most investors DEFI prefer liquid and negotiable assets such as cryptocurrencies and stalls, which can generate attractive yields. Many prefer, for example, would buy Stablecoin USDT (USDT) from Tether and play it, gaining rewards while keeping the property.
This may be why the market capitalization of gold tokens remains modest. Tether Gold, the most important gold token in the world has a market capitalization of just under $ 835 million, for example, while Paxos Gold is around $ 799 million. Combined, this is equivalent to only 1% of the USDT market capitalization.
Unlock income from the oldest asset in the world
To unlock the full potential of Gold, we have to go further in token by creating a DEFI ecosystem where tokenized gold is actively put to work – borrowed, loaned and integrated into strategies bearing the yield.
One possibility is for companies such that gold minors is to emit tokenized versions of their reserves which can be transformed into stablescoins which can then be gone to obtain a yield. Taking advantage of the protocols whose liquidity mechanisms allow the trading of stablecoins tokens and real asset tokens (RWA), the holders could benefit from new performance opportunities throughout the DEFI ecosystem.
Beyond the advantages of performance possibilities, blockchain technology means that investors in tokenized gold can benefit from the flexibility of negotiation 24 hours a day, real-time price discovery and the almost instantable regulation without compromising the stability of the assets.
The future of gold investment
It may be ironic that – just as governments around the world are starting to put their approval scheme on digital finance – gold becomes highly desirable goods. Public interest in computer science will develop as governments essentially ratify digital finance. At the same time, the appetite for gold in these uncertain times will also increase.
DEFI could bring together these trends and launch a natural evolution of gold property which provides a solid bridge between traditional and digital finance. While gold inside traditional markets attracts investors looking for stability, DEFI offers opportunities that do not compromise this stability, because it presents new performance opportunities.
Gold has captured humanity for thousands of years. It is the foundation of myths, the standard of wealth and ultimate coverage against uncertainty. But in today’s financial world, he needs an upgrade.
By integrating gold into the DEFI ecosystem, we could unlock its true potential – not only as a reserve of value but as an active income. The oldest active in the world is finally on the verge of digital evolution.
Opinion of: Kevin Rusher, founder of Raac.
This article is for general information purposes and is not intended to be and must not be considered as legal or investment advice. The points of view, the thoughts and opinions expressed here are the only of the author and do not reflect or do not necessarily represent the opinions and opinions of Cointellegraph.
