28.05.2021Read Time: 5 min

Crypto Crash Throws Gold-Backed Stablecoins Into the Limelight

AurusGOLD – a stablecoin that represents 1 gram of gold

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The bitcoin crash of the last few days threw the entire crypto into a frenzy as many in a bid to cut losses sold all their crypto assets in a panic and others gnash their teeth online due to unquantifiable losses. A report by Bybt reveals that on May 19 there was over $8.6 billion worth of liquidations. In the wake of the crash, cryptocurrency lost nearly $1 Trillion of its market cap. Most exchanges including top-tier ones like Binance, Gemini, Huobi, and Coinbase also experienced outages due to the abnormal surge in trading volume as investors scampered to sell their assets. Once again, reopening the longstanding debate about whether or not cryptocurrencies can be trusted as a long-term store of value.

A search for stability

Meanwhile, those who lost sizable portions of their portfolio are now looking to precious-metal-backed cryptos alternatives to secure and grow their investments. At this point, crypto volatility is no longer news, having been the bane of existence of investors since the invention of the still-nascent cryptocurrency markets. In the last many months, it has gotten worse - favorably and unfavorably - all of which culminated into the recent epic crash. Questions have been raised whether top 10 cryptocurrencies like bitcoin and dogecoin are ready for mainstream adoption as replacements for fiat rather than speculative assets if lows and highs could be dictated at the whims of an individual. Elon Musk might be an influential billionaire but he’s just one person and his influence on many crypto assets is problematic. Wherever your loyalties lie, one thing is clear: Cryptocurrency was never designed to be controlled by an elite class. It remains inherently the people’s currency.

Stablecoin fundamentals

But that’s not the only reason why many are now seeking refuge in asset-backed currencies like AurusGOLD – a stablecoin that represents 100% ownership of physically allocated gold. Two major news items were also implicated as reasons for the crash: first is the announcement by the Chinese government about its plans to crackdown on bitcoin mining and trading activities. China had been the hub of bitcoin mining activities due to its cheap electricity and other resources and the latest news could potentially hurt bitcoin's efficiency. The second news item also gives pause. For the first time, Tether Limited (issuers of the most popular stablecoin Tether) released a breakdown of its reserves, revealing the shocking details industry experts have suspected for years – Tether (USDT) is not 100 percent backed by the U.S dollar as it once claimed.

A stablecoin as the same suggests is a cryptocurrency that is fully backed by a peg and often used as a safety net in the face of volatility. In the case of USDT, it once claimed to be entirely backed by United States Dollar (USD) with each USDT equivalent to 1 USD and redeemable. Apparently not. According to recent reports, only 3.87% of USDT's market cap is backed by US dollars. The rest? Digital tokens, commercial paper, fiduciary deposits, reverse repo notes, treasury bills, secure loans, corporate bonds, funds, and precious metals. With an influx of inflation on the horizon, and as USDT continues to pump its supply, the question remains, how long will confidence last - when will the pieces fall?

The need for real-world stability

In response to the inherent flaws of current “stablecoins” like USDT, blockchain innovator Aurus has designed the most stable crypto assets that are 100% backed by precious metals: AurusGOLD, AurusSILVER, AurusPLATINUM. Each token represents and can be redeemed for 1 gram of constantly audited and certified physical gold, silver and platinum respectively.

Aurus stands out from its competitors with their decentralized approach to tokenization. Aurus’ blockchain platform enables a global network of established precious metals industry players to autonomously tokenize and distribute their own precious metals backed tokens. Such a system ensures users that they are not dependent on a single source nor subject to a single-point of failure.

Aurus’ selection of stablecoins comes with a host of perks and is a currency whose time in the spotlight has finally arrived. The point of attraction for most investors is the much needed exposure to real world stability they provide. As most crypto traders have come to realise that when altcoins fall, bitcoin falls just as hard, minimising its effectiveness as a hedge. While they might not bring 10x returns, AurusGOLD and its counterparts have definitely earned a place in the crypto world and can confidently be classified as a true stablecoin.

The ultimate hedge against volatility: AurusDeFi

Where gold and silver might seem boring to some, AurusDeFi (AWX) might be the perfect solution - as the ultimate hedge against volatility. Aurus circulates a secondary token called AurusDeFi which entitles its holders to a portion of the rewards generated from the use of AWG, AWS and AWP. With a limited supply of only 30 million tokens, AWX provides its holders with a passive income stream based on the vaulting and transactional fees accumulated from the platform's flagship tokens. So, no matter which way the market is heading - AWX holders will always benefit from the increased usage of Aurus tokens.

Gold Stablecoins in the Crypto Market

There is no objective reason to remain stuck in cryptocurrencies whose volatility undermines its function as a store of value. Aurus’ asset-backed stablecoins are not just stablecoins to store away your profits, holding it will also ensure your assets become more valuable as gold price appreciates against the dollar.

As many cryptocurrencies continue to make the slow climb back to their respective all time high, many will forget the lessons that the recent dip portends and carry on business as usual until the next crypto crash comes. Only asset-backed currency investors will be prepared and spared its impending turbulence.

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