London’s Blockchain.com Extends Partnership with CoinShares to Support “Wrapped” Gold backed Crypto Token

Amadeo Pellicce, Product Manager at Blockchain.com, a leading crypto wallet provider and blockchain explorer service, notes that last year, they had teamed up with digital asset firm CoinShares to introduce DGLD, a crypto-asset representing allocated physical gold that’s kept securely in a Swiss vault.

Pellicce claims that a common request from crypto investors was more ways to access and use DGLD, and to also provide an option to store DGLD where they usually store their other crypto-assets.

Pellicce confirmed that Blockchain.com has extended its partnership with CoinShares in order to support the launch of wrapped-DGLD (wDGLD), an ERC-20 compliant token that’s reportedly pegged 1:1 with gold. The wrapped token aims to combine “the appeal of a gold-backed asset like DGLD — available for trading on the Blockchain.com Exchange — with the accessibility and flexibility of an ERC-20 token which you can use on the Blockchain.com Wallet or anywhere in the Ethereum Network.”

The Blockchain.com team notes:

“With more and more crossover between gold investors and crypto investors, we’re pleased to provide the opportunity to trade or hold truly-digital gold in new and exciting ways. wDGLD is available to trade on the Blockchain.com Exchange today and in the Blockchain.com Wallet on web and mobile.”

As explained in the announcement, DGLD is a digital asset that represents “allocated physical gold stored in a Swiss vault, and tokenized with a side-chain built on the Bitcoin network.” The release further noted that “in doing so, we’re empowering convenient, 24/7 purchasing of gold, with the independence of physical gold ownership.”

Each DGLD token is “the digital equivalent of 1/10th of a troy ounce of gold, vaulted in Switzerland.” The announcement also mentioned that before new digital tokens are minted, gold is first “allocated and placed in the vault.” After depositing the gold, a DGLD “representing that specific gold is created and sent to a DGLD wallet.” According to Blockchain.com, “this simple approach unleashes physical gold and renders it both digitally usable and physically redeemable.”

Wrapped-DGLD (wDGLD) is an ERC-20 compliant token that resides on the Ethereum (ETH) blockchain network. It represents “a unit of DGLD.” It also “lives as a smart contract on the Ethereum network where all its transactions are auditable and public.” Users are able to purchase, sell or swap wDGLD “against any other crypto native asset that is supported in [Blockchain.com’s] network.”

As covered in July 2020, gold had set highs past $1,900 per troy ounce. At that time, stablecoin issuer Tether had claimed that demand for its gold-backed crypto, XAU₮, had also surged.

Bitcoin’s (BTC) correlation with gold had weakened by mid-2020, but had strengthened against the S&P 500 stock market index (in June 2020). Earlier this year, the Dash Investment Foundation, a supporter of the digital asset Dash, had invested in gold to diversify and strengthen its portfolio.

In May 2020, CoinShares introduced the first gold and crypto-asset index on Bloomberg and Refinitiv. The company aims to create “investable” benchmark products. Also in May, institutional and retail investors had been looking to gold and Bitcoin (BTC) as alternatives to stocks at their valuations at that time.

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