In the landscape of cryptocurrencies, asset-based coins have emerged as an innovative paradigm shift. Also referred to as tokenized assets or asset-backed tokens, these coins symbolize ownership of tangible or intangible assets. These assets range from commodities like gold and real estate to intellectual properties such as copyrights or patents.
Prominent Asset-Backed Tokens for 2024
Considering factors such as market capitalization and growth potential, several notable asset-backed tokens are poised for attention in 2024:
Tether Gold (XAUT)
Tether Gold (XAU₮) revolutionizes gold ownership by offering a digital representation of physical gold on a 1:1 basis. With each XAU₮ token backed by one fine troy ounce of LBMA-standard gold, it ensures stability and credibility. Unique features include portability, divisibility down to 0.000001 ounce, and 24/7 trading accessibility. XAU₮ tokens can be easily redeemed for physical gold in Switzerland, and their storage is as straightforward as other cryptocurrencies. Transparency is ensured through Tether’s tracking system, allowing users to verify gold allocation in real-time.
cWBTC (CWBTC)
cETH (CETH)
cETH, an abbreviation for Compound Ether, is a cryptocurrency issued within the Compound Protocol, a leading decentralized finance (DeFi) project specializing in loans. Users generate cETH by depositing ETH into a pool, representing their lending stake on the Compound platform. Holders of cETH can redeem it for the total amount of deposited tokens plus accrued interest, making it increasingly valuable over time. With a circulating supply of approximately 5.5 million cETH, its market cap is around $437.7 million. While freely tradable, cETH is primarily used for securing lending amounts and earning interest within the Compound ecosystem. It underscores the dynamic nature of DeFi, prompting careful consideration in investment decisions.
PAX Gold (PAXG)
PAX Gold (PAXG) is a digital token backed by physical gold, providing a secure and cost-effective method to own investment-grade gold. Each PAXG token represents ownership of one fine troy ounce of gold stored in LBMA vaults in London, custodied by Paxos Trust Company. Paxos offers PAXG with a lower cost structure compared to alternative gold tokens and ETFs, with no storage fees and a low minimum purchase amount. The allocated gold backing PAXG undergoes monthly audits and is held in LBMA vaults, ensuring security and regulatory compliance under the oversight of the New York State Department of Financial Services. PAXG transactions are free from settlement and credit risk, featuring near-instantaneous settlement and the option to redeem for LBMA-accredited Good Delivery gold bullion bars or unallocated Loco London Gold.
Olympus (OHM)
Olympus is a decentralized reserve currency protocol backed by the OHM token, each of which is supported by a basket of assets in the Olympus treasury. OHM aims to be a stable crypto-native currency, backed by assets like DAI. It employs mechanisms such as Protocol Owned Liquidity (POL) and Range Bound Stability (RBS) for stability and flexibility. OHM is deeply liquid, community-owned, and resistant to censorship. As of now, OHM is priced at around $12.07, with a 24-hour trading volume of approximately $722,681.60 and a market capitalization of about $198,022,023.
Tenset (10SET)
tBTC (TBTC)
tBTC (TBTC) is a cryptocurrency functioning on the Ethereum platform, designed to allow Bitcoin holders to mint TBTC tokens using their BTC holdings. These tokens provide access to decentralized finance (DeFi) applications on Ethereum. As of now, TBTC is priced at approximately $73,254.87 USD, with a recent 3.11% increase in value over the last 24 hours. It currently has a supply of 1.136 tokens, with none in circulation. TBTC is tradable on 16 active markets. Users can acquire TBTC by depositing BTC into a specific wallet via the TBTC Decentralized App (dapp) within the Bitcoin blockchain.
These highlighted tokens represent merely a subset of the diverse array of asset-backed tokens available within the market landscape. As the cryptocurrency domain evolves, further innovations and variations in asset-backed token offerings are anticipated.
Challenges and Risks
Despite their myriad advantages, asset-based coins aren’t devoid of challenges and risks. Chief among these is the imperative of ensuring proper management and custodianship of the underlying assets. This necessitates trust in the issuing entity.
Moreover, while asset-based coins exhibit lower volatility compared to conventional cryptocurrencies, they remain susceptible to market risks. Fluctuations in the value of the underlying asset directly impact the value of the coin.
Princy Agarwal, a postgraduate in English from Delhi University, writes content for Tricky Finance, where they simplify complex financial topics for readers. With a knack for clear communication, Princy’s work helps make finance understandable and accessible to all.