Lessons from Working At An Asset-backed Token Project

[RooseveltOah]

I just left the job for a couple of months and I’d like to share some of my learnings as an end to that part of the journey, hopefully would help some of you in certain ways.

The product was a gold-backed token, I’m not going to name names but you know there are a bunch of us, none of us gained any traction, looking back the answers seem quite easy, but at the time it was not clear, we hope to not make the same mistakes again and here’s how.

The project started out with promise, gold has proven to be one of if not the most stable asset In human history, the founders were experienced and resourceful, we’ve gotten enough funding even without an ICO, and our partners including an independent gold vault is internationally Well-established. Despite all these, apparently we did not succeed, before I get into the lessons learned I’ll talk a little about the journey, that being the main use cases we have tested (we tested way more than these but these seem to be the major ones)

Hedge with our gold-backed token
We assumed since gold worked well as a hedging vehicle in the traditional world, it can probably play the same role in the crypto world, we went to hedge funds, family funds, crypto companies, traditional finances, crypto funds and many more, and came to similar conclusions. If one has put money into crypto, he probably doesn’t care much about risk with that part of the portfolio, and with companies who are born in crypto, they don’t understand what gold can do to them, which in all honesty is nothing, gold has a negative correlation with USD, but not crypto, when recession comes, it hedges perfectly, but when crypto market is going down, gold doesn’t go up. Case one closed.

How about making this token an investment (or savings account)
We then think there’s so much interest for gold as an investment tool for individuals in the traditional world, especially China and South America, how about making it an investment vehicle instead, we collaborated with some wallets and provided attractive yields, but in the crypto world we’re comparing ourselves with 10x 100x 1000x returns, if someone puts money in crypto that’s what they would be expecting, not 20% annual growth. A savings account then seem more like a possible scenario, but the crypto community has so much faith in Bitcoin, they say BTC is not fluctuating, USD is, and for ones who still think USD is the most stable currency, they save in USDT.

Use gold to pay for something
Of course we’re not talking about buying coffee here (but you’d be surprised how much this comes up in our discussion), we collaborated with some gambling platforms to see if we can become one of their unit of accounts, they agreed and we went on trial, these are gamblers from the traditional world, not Dapp users, to them the exchange calculations between one gram of gold and dollars is way too troublesome, and isn’t the unit of account they’re used to, to them USD will always be the most stable because they are used to calculate and price things in USD, the entry barrier is too high, this is same for bitcoin, if not enough pain is pushing people to change, they’ll stick to what they’re comfortable with.

These all seem quite obvious when looking back, but at that time we were buried in wishful thinking and refuse to see reality as early as possible, here are some of the things I learned
- What worked in traditional world, doesn’t always work in crypto
- Find a problem then build products to solve it, not the other way around
- Stability is relative and only exist in people’s minds, it’s what people are used to, not what professionals think what haven’t changed for 2000 years

Hope this is useful to some

[itos84]

This is great advice! Thanks for your sharing your lessons learned from a crypto project. We are building or own video games platform and reading all these experiences really help to make a better product!

[avikz]

The major reason why gold backed token didn't work well is not due to the entry barriers that you have mentioned! they are definitely true but doesn't really affect much! The main reason is the easy availability of gold and the digitization of this industry. Anyone can buy 24k gold using their smartphone, from a government registered seller, at the market price, without having the hassle of handling physical gold. It can be bought in any fraction and with smallest amount of money! After accumulating a certain amount, you can ask for delivery of that gold as well!

Then why would anyone take the hassle to invest in a crypto token with zero brand reputation and belongs from a foreign location? I wouldn't do that! I would rather choose the above method to get exposure in gold investment! That's easy for anyone!

Does it make sense?