On Friday, July 3rd, Nash listed Novem’s gold-backed NNN token for trading against USDC on its non-custodial exchange. To promote the listing, Nash hosted an ask me anything (AMA) on its community forum with a representative from the Novem team. Additionally, on July 6th, Novem participated in an AMA via the Neo sub-Reddit, with COO, Fouad Soultana, answering questions.
Across the two AMA’s, Novem answered questions regarding the benefits of holding a tokenized gold-backed asset, regulation compliance, gold ownership verification, incorporation in Liechtenstein, redeeming NNN tokens for physical gold, plus much more.
An selection of questions and answers from the AMA’s can be found below:
Blockchain, decentralization, and regulations
What is the reason you have built on the Neo blockchain and not on Ethereum?
Novem: The gold industry is traditional, and what we are proposing is a rather radical change. So, explaining to conventional precious metal buyers how to use blockchain to buy tokenized gold is a challenge. To tell our customers they need ETH for transactions on the Ethereum network is another challenge that we avoided by using Neo as a platform, as we do not need any GAS for transactions.
Would you consider the physical decentralization of gold storage to be in line with the vision of decentralization?
Novem: Complete decentralized gold storage would undermine one of our unique selling propositions, which is that Liechtenstein, as a storage location, allows gold owners unparalleled gold protection you would not have when stored in other countries.
Nevertheless, to have a lean redeeming process, there will be storage locations in selected countries that will hold smaller quantities than the primary storage location in Triesen, Liechtenstein.
To avoid any confusion, it is not our vault! We have partnered up with Trisuna OZL, which store all the gold of our token owners. We will see to decentralize our setup further as far as it fits with the first premise of investor’s asset protection.
How does Novem work with the governments that don’t currently have cryptocurrency regulations? Further, what makes Liechtenstein best-suited location for gold storage?
Novem: In general, we always get legal opinions from lawyers in the respective country to understand the legal requirements before moving forward.
Liechtenstein is unique because we can tokenize the physical gold and do not have to tokenize a certificate or something similar. The legal basis for quantity ownership allows our investors to enjoy shared storage. It does not matter which specific gold bar you own, but rather which amount without having a complicated setup in place.
Compared to other countries, in Liechtenstein there is no dispossession law where the government might seize the gold of private individuals in times of crisis, which offers our token holders another layer of protection.
Does Novem have the right to freeze NNN tokens on wallet addresses?
Novem: No, we can’t freeze any assets, which is a big differentiator to other projects and why we located in Liechtenstein. Article 34 of the Liechtenstein Constitution expressly protects private property. Laws governing the protection of privacy have been enforced since 1926 and have laid the foundation for a long tradition of asset protection. This makes Liechtenstein one of the few places where the government cannot access and seize your property, including gold. Your token, your gold at any time!
Who provides the liquidity for the Nash non-custodial exchange?
Novem: Novem will provide the liquidity.
Can users send USDC to Novem to purchase gold and mint tokens on our behalf?
Novem: You may purchase NNN on the Nash non-custodial exchange with USDC, as those tokens are already minted. We will continuously provide new supply to satisfy demand.
Do you have plans to list NVM on Nash in the future?
Novem: Yes, we would like to collaborate on many things with Nash. One is the listing of both our tokens.
If I lose the keys to my NNN tokens, what happens to the underlying gold? Likewise, what happens if my keys are stolen?
Novem: At the moment, it is like with every other cryptocurrency. If you lose your private key, you no longer have access to the tokens, and the gold remains in the vault. We are evaluating different solutions for this issue, which the whole industry needs, in our opinion.
Does the insurance protect investor’s portions of the physical gold stored in the vaults if a robbery or other loss occurs?
Novem: Yes, 100%. Liechtenstein is known for storing highly valuable assets and is very proficient in their field.
How can users verify the NNN token is backed by gold?
Novem: We have set up a quarterly audit by Grant Thornton. They check that we have the amounts stored, which are displayed on the blockchain. You may review our latest audit report here: https://novemgold.com/en/audit-reports.html.
They make sure that what we state to have in storage corresponds to the exact amount of gold stored in the vault. If demanded by our community with growing demand and increased gold stock, we might include more than one auditor to have even more auditors confirming the amounts.
Redeeming NNN tokens for physical gold
For Nash users that have undergone KYC, can they redeem NNN without further KYC?
Novem: For redeeming, you have to KYC with us. However, once you redeem your gold, you lose the advantages that led us to tokenize gold in the first place. We tokenized gold to save you insurance, storage fees, and get rid of intermediaries.
However, if you want to redeem it, you may contact us at email@example.com, or you can message me on Telegram to clarify whether we can deliver to your location. We can deliver to most countries in the world. Nevertheless, there also some countries where we can not deliver.
If I want to redeem my gold in your vaults, what does the process look like?
Novem: You may check our Terms of Service at https://novemgold.com/en/terms-of-service.html.
In short, the process at the moment is as follows: write us an email to firstname.lastname@example.org. Depending on the amount and where you are located, you can either have the gold sent to you, or you can pick it up from one of Novem’s locations.
Advantages of gold-backed tokens
Given that the price of physical gold has decoupled long ago from the price of paper gold, is there a price feed regarding physical gold compared to the NNN token?
Novem: The price is made up of the London spot price and a premium. The markup covers costs such as ordering the gold, checking the gold quality, auditing the gold quantities, customs clearance, and delivery to the warehouse. Besides, insurance and storage are free of charge compared to other projects.
As long as the gold is on the blockchain, the price is secondary, as there is no intermediary. In summary, the price on the exchange is always kept at the level of the spot price, plus the markup, so there is no disadvantage for the token holder.
This is a big difference to other projects, and why it is important to come from this industry, as gold bar trading is a completely separate business.
What are the advantages and disadvantages between gold-backed token and physical gold? How will gold-backed token trading replace physical gold trading?
Novem: There are no intermediaries when selling. Settlement occurs quickly, which increases gold-backed token holders’ flexibility. Further, with Novem, NNN token holders have free storage and insurance, all of the stored gold is LBMA certified 24 karats, NNN token holders have direct gold ownership, and there is no dispossession law in Liechtenstein.
In essence, settlement is transparently possible within seconds without intermediaries. There are no minimum order quantities. One can buy large or tiny amounts and trade globally at one’s discretion.
Instead of exchanging the physical gold, the user can now exchange ownership through tokens, representing the physical commodity.
Note: Some edits have been made for formatting and readability.
The full AMA’s can be found at the links below: