Financial markets can often get turbulent during times of economic instability or increased inflation. Such situations become sustainable through a strategy known as hedging in the market. Popularly, when volatility hits, investors tend to convert their holdings into precious or essential commodities or other less volatile assets to preserve their value. As an ever-in-demand commodity, Gold has a great track record when it comes to sustaining such pressing times in the market. As of now, it trades at its highest price since last June. This common practice of gold hedging is set to make its move to the cryptocurrency market with VNX’s plans for tokenized commodities.
VNX is the first licensed platform for trading tokenized metals in the crypto ecosystem. Launched in 2022, this investment firm establishes a bridge between the cryptos and commodities like Gold. The tokens you buy from VNX represent your ownership stake in the physical holdings of the commodity stored in a secure vault in Europe. Reportedly, investors can use both fiat and cryptocurrencies to make their purchases at VNX. The KYC and AML compliant trading infrastructure bring you institutional-grade trading experience. This platform has also been registered with the globally recognized Financial Management Association.
Apparently, the commodity that is going to be used for this new venture is gold, the widely used precious metal. VNX will launch Ethereum compatible digital tokens that go by the ticker symbol VNXAU. These tokens will represent the physical holdings of the precious metal kept in a secure vault in Liechtenstein. The gold reserve in the vault is of the purest form certified by the London Bullion Market Association. Furthermore, each gold bar in the vault is given a serial number which would refer to their respective tokens. Each token from this VNXAU collection will carry the value of a gram of gold and will be priced based on the metal’s movements in the market.
Despite being prone to volatility, the crypto market has only limited options for hedging so far, like stable coins that are commonly anchored to the USD. On the other hand, hedging in TradFi comes with its own set of difficulties like policies, taxes, commission, and upkeep expenses.VNX hopes that this new venture will help the crypto ecosystem better its digital assets management, given the market’s proclivity towards volatility. While expressing his delight over VNX’s new plans, CEO Alexander Tkachenko said, ” Our secure platform and tokens backed by gold offer clients a cutting-edge way to invest in precious metals, without the headache of traditional ownership associated with storage, transportation, etc.”
Addressing these issues, VNX not only expands the hedging portfolio of the crypto ecosystem but also offers these services with absolutely no storage or maintenance cost. With VNXAU, investors can eradicate middlemen, commissions, or currency conversion in their attempt to mitigate the risks. This innovative commodity-based stable coin attempts to bring all the advantages of holding gold along with the flexibility of cryptocurrencies. In addition to these, the holders of VNXAU can also receive a minimum of one kilogram of their physical holdings in person or through delivery.
VNX will complete all the tokenization services in adherence to the Tokens and TT Services Providers Law in the Principality of Liechtenstein and the policies of the Finance Management Association. Director Dr. Thomas Dünser from the Office for Financial Market Innovation and Digitization in Liechtenstein believes that the region’s ‘Blockchain Act’ will create a link between the token economy and the real world. Innovative projects like VNX seem to utilize this legal tender to a positive end, he believes.