Tokenized Gold on Cardano with the APEX Group

[GENERAL] Name and surname of main applicant

Florian Volery

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

Entity (Incorporated)

[GENERAL] Co proposers and Additional applicants

Florian Volery | Liqwid Co-founder

https://www.linkedin.com/in/florian-volery/

Pavel Izmaylov | APEX | Director, Financial Services and Digital Assets

https://www.apexgroup.com/

https://www.linkedin.com/in/pavel-izmaylov-3745a37/

APEX description: Apex Group Ltd., established in Bermuda in 2003, is a global financial services provider. With over 13,000 employees globally, Apex Group provides services into 50 jurisdictions delivering an expansive range of services to asset managers, financial institutions, private clients, and family offices. The Group has continually improved and evolved its capabilities to offer a single-source solution through establishing the broadest range of services in the industry; including fund raising solutions, fund administration, digital onboarding and bank accounts, depositary, custody, super ManCo, corporate services and a pioneering ESG Ratings and Advisory solution. Apex Group’s purpose is to be more than just a financial services provider and is committed to driving positive change to address three core areas; the Environment and Climate Change, Women’s Empowerment and Economic Independence, Education and Social Mobility.

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

6

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language.

No

[GENERAL] Summarise your solution to the problem (200-character limit including spaces)

This project proposes to bridge TradFi gold sellers with DeFi/blockchain by leveraging their existing infrastructure and deploying it on Cardano.

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

No

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.”

No dependencies

[GENERAL] Will your project’s output/s be fully open source?

No

[GENERAL] Please provide here more information on the open source status of your project outputs.

The goal of this project is to connect traditional finance players with the Cardano blockchain ecosystem. Most of the work is done on the legal setup and onboarding of existing partners, working in the traditional gold industry. The code developed will be used by the gold sellers to mint tokenized gold as a Cardano native tokens.

[METADATA] SDG rating

The project of bridging traditional finance (TradFi) gold sellers with the Cardano blockchain aligns with several United Nations Sustainable Development Goals (SDGs). Here are some applicable SDGs:

SDG 1: No Poverty

By providing broader access to gold as an investment and medium of exchange, this project can help individuals in underserved communities build wealth and achieve financial security.

SDG 8: Decent Work and Economic Growth

Integrating TradFi with DeFi can stimulate economic growth by fostering innovation, increasing efficiency, and creating new financial products and services.

SDG 9: Industry, Innovation, and Infrastructure

This project promotes innovation by merging traditional financial infrastructures with blockchain technology, enhancing industry capabilities, and developing resilient and efficient financial systems.

SDG 10: Reduced Inequality

By democratizing access to gold investments/medium of exchange/store of value and financial services through blockchain technology, the project can help reduce financial inequality both within and between countries.

SDG 16: Peace, Justice, and Strong Institutions

Blockchain technology can improve transparency and accountability in financial transactions, contributing to the development of more just and effective institutions.

SDG 17: Partnerships for the Goals

This initiative embodies the spirit of partnership by connecting traditional financial institutions with blockchain technology, encouraging collaboration across different sectors to achieve common goals.

By leveraging the Cardano blockchain to connect TradFi gold sellers with DeFi solutions, the project supports sustainable economic growth, innovation, reduced inequality, and stronger institutions, aligning with these key SDGs.

[SOLUTION] Please describe your proposed solution.

Our proposed solution is to develop a white-label platform in collaboration with APEX to offer tokenized gold on the Cardano blockchain. This platform will integrate with an established player in the gold industry, who will be responsible for the physical buying, storage and selling of gold. Our solution leverages their existing infrastructure to provide seamless fiat on/off ramps (incl. compliance checks).

By tokenizing gold, we can create a Cardano native token that represents physical gold, enabling users to trade and store gold in a secure and decentralized manner. The tokenized gold can serve as a medium of exchange and a store of value, combining the stability of gold with the efficiency and accessibility of blockchain technology.

The timing is great as the price of gold, a traditional safe-haven asset, has risen amid investor concerns about flailing banks and unrestrained government money printing, which would lead to expanding fiat money supply and currency devaluation.

[IMPACT] Please define the positive impact your project will have on the wider Cardano community.

The introduction of tokenized gold on the Cardano blockchain will have several positive impacts on the wider Cardano community:

Enhanced Financial Services: By integrating traditional gold trading with blockchain technology, we will provide Cardano users access to a stable and universally recognized asset. This can attract new users to the Cardano ecosystem, including those interested in precious metals and traditional finance.

Increased Utility and Adoption: Tokenized gold can be used as a medium of exchange and a store of value, providing a stable alternative to more volatile cryptocurrencies. This utility can encourage more transactions and interactions within the Cardano ecosystem.

Broader Ecosystem Growth: Partnering with a major player in the gold industry and utilizing their existing infrastructure for fiat on/off ramps will help bridge the gap between traditional finance and decentralized finance. This can lead to increased trust and adoption of Cardano-based solutions in the traditional finance sector.

Economic Stability: By providing a digital token backed by a tangible commodity like Gold, we can offer a hedge against inflation and economic instability. This can provide economic resilience for users within the Cardano community.

Innovation and Leadership: Launching a robust tokenized gold platform positions Cardano as a leader in the integration of traditional assets with blockchain technology, showcasing its capabilities and attracting further innovation and investment into the ecosystem.

Overall, this project positions Cardano technology as a leading solution for tokenisation of RWA in competition with the likes of other blockchains, such as Stellar and Ethereum. The launch of this project will be positively news for the whole Cardano ecosystem.

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

Our capability to deliver this project with high levels of trust and accountability is anchored by our collaboration with APEX and the proven track record of Liqwid Finance.

Expertise and Resources of APEX:

APEX is a globally renowned company, managing over $2 trillion in assets, and is highly regarded for its expertise in compliance and regulatory matters. By partnering with APEX, we leverage their extensive experience and robust infrastructure, ensuring that our product will meet the highest standards of trust and accountability.

Additionally, APEX’s vast network of clients and intermediaries will provide invaluable support and market access, facilitating the successful launch and adoption of our tokenized gold solution.

Apex is a leading institution for tokenised RWA, see recent examples : https://www.apexgroup.com/insights/sygnum-bank-hamilton-lane-and-apex-group-expand-access-to-private-markets-via-blockchain-shares-in-usd-36bn-fund/

Industry Connections:

APEX's portfolio includes numerous companies operating in the gold industry (mines and gold resellers), many of whom are keen to expand their presence on the blockchain for further growth. This established interest and collaboration potential significantly enhance our project's feasibility and credibility.

Proven Blockchain Expertise:

On the blockchain front, Liqwid Finance has already demonstrated its capability by becoming the leading lending and borrowing protocol on the Cardano network. Our successful track record in developing and deploying secure, scalable, and user-friendly DeFi solutions underscores our ability to deliver this new project effectively.

Leadership and Experience:

Florian Volery, a co-founder of Liqwid Finance, brings over a decade of high-level experience in banking and financial services. His deep understanding of banking activities, financial services regulations, and operational excellence, combined with his entrepreneurial success in launching Liqwid, adds a layer of expertise and reliability to our project. He is also the person who successfully launched the first Cardano staking ETP in the world, also in collaboration with APEX.

Validation of Feasibility. To ensure the feasibility of our approach, we will:

• Leverage APEX's compliance and regulatory framework to navigate the legal landscape effectively.
• Utilize APEX's existing gold industry connections to streamline the integration of traditional gold trading with blockchain technology. Contacts have already been made with two different 3rd parties, who are already selling gold to customers. By partnering with us, they would “extend” their distribution network to the Cardano blockchain. Such companies are interested as it creates a new source of revenues and allow them to tap on new markets. Then having such a product on Cardano would allow access to gold for every Cardano user.
• Rely on Liqwid's established technical infrastructure and expertise to implement and manage the creation of gold tokens through a smart contract.
• By combining the strengths of APEX and Liqwid Finance, we are confident in our ability to deliver a secure and innovative tokenized gold product on the Cardano blockchain.

[Project Milestones] What are the key milestones you need to achieve in order to complete your project successfully?

 

This project would have two phases:

1. Connect: Successfully close the loop by extending the distribution network of gold providers to the Cardano blockchain.
2. Deploy: Open new markets for these assets on DEX and lending platforms. Provide liquidity and perform market-making activities.

The third phase is not part of this proposal but highlight the next major milestone we will aim to reach after this project.

3. Replicate for new assets: Once a well-known asset like gold is deployed, the structure and ecosystem building blocks can be replicated for any real-world assets. Overall, this project serves as a proof-of-concept for deploying real-world assets (RWA) on the Cardano ecosystem at a large scale.

Phase 1: Connect

Milestone 1a: Build the smart contracts to mint/redeem the tokens

Milestone 1b: Formalize all the different legal contracts / documents

Milestone Output(s) 1a: Smart contracts are existing and are audited

Milestone Output(s) 1b: All the legal documents are finalized.

Acceptance Criteria:

1a: Smart contracts are tested and working as expected. ->Successfull test for 1 user.

1b: Contracts are signed. Terms and conditions are completed -> 1 user is onboarded.

Milestone 2: Integrate the 3rd party solution with a Cardano blockchain wallet to transfer in/out the assets

Milestone Output(s): Cardano wallet implemented at the 3rd Party IT infra.

Acceptance Criteria: 1a: A user can connect its wallets and transfer gold tokens (in/out) on the Cardano wallet from the 3rd party website.

Milestone 3: Create a dedicated website, which is integrated with the 3rd party front-end solution for mint/redeem (meaning buying/selling Gold for fiat currencies).

Milestone Output(s): A website exists about Cardano gold, explaining what it is and how it works.

Acceptance Criteria: 1a: A user can connect to this website and access the different pages (3rd party issuer) or a DeFi place for more utility of the Gold token (lending / DEX).

Milestone 4: Create a reserve pages and auditing process for ensuring the gold reserves are there

Milestone Output(s): A website exists about Cardano gold, explaining what it is and how it works. This includes the reserve statement. -> These are reviewed regularly.

Acceptance Criteria: 1a: A user can consult the reserve statement made by a third party about the gold existence backing the Cardano gold.

Phase 2: Deploy

• Open gold markets on DEXs with order book, integrated with a market maker strategy
• Onboard liquidity providers (either gold producers or standard market makers)
• Open gold markets on lending protocols
• Perform marketing activities about 1) what is the Gold tokens and 2) how it is working

Milestone Output(s): A user can use its Gold tokens in the Cardano DeFi (lending and DEX).

Acceptance Criteria: 1a: There are liquidity for Gold Tokens ( in lending and DEX) and the gold price on DeFi corresponds to the Gold price traded spot in the TradFi.

[RESOURCES] Who is in the project team and what are their roles?

Persons

Florian Volery – Project Lead

Liqwid Co-Founder

https://www.linkedin.com/in/florian-volery/

Liqwid Team

https://app.liqwid.finance/

 

Pavel Izmaylov – APEX lead

https://www.apexgroup.com/

https://www.linkedin.com/in/pavel-izmaylov-3745a37/

Roles:

Solution design and implementation: Florian Volery

Project management: Pavel is responsible to ensure the correct integration of gold partners within the solution and represents APEX, while Florian is coordinating within all the parties.

Existing gold partners: Two major players have already been approached for extending their footprint in the blockchain world through APEX.

IT and Integration: Liqwid Labs and the IT team of the selected gold partner

Marketing: perform by the Liqwid Team, which is crafting strategies that effectively communicate the project's value and innovation on the Cardano blockchain.

They would be also assisting by the selected Gold partner’s marketing team.

• APEX marketing and communication team would also promote this new product through all the news agency working with them currently.

• Blockchain distribution: Liqwid Team will be responsible to open new markets (DEX & Lending) on the Cardano blockchain.

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources.

Budget 1.18M Ada ($545,000)

• $180k USD pour APEX. Drafting legal contracts between the different parties (APEX, Liqwid, Gold reseller). Setting up a process to manage the reserves and perform controls at the start.
• $90k – GOLD 3rd party: Mostly IT integration with their front-end and connect their existing system with a Cardano wallet to distribute their product
• $275k for Liqwid to 1) Create the smart contracts to mint/burn the Gold tokens (+ pay the audit of these smart contracts), 2) Support IT integration with 3rd Party company for these smart contracts, 3) Support 3rd party with Cardano network integration (serve as domain-expert) 4) Distribution of the Gold tokens (incl. Website) – See phase 2 of the project milestones)

[VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

The cost of the project to tokenize gold on the Cardano ecosystem represents exceptional value for money due to several key factors:

1.Leverage of Established Expertise:

Partnering with APEX, a globally recognized leader in compliance and asset management, ensures that the project benefits from extensive industry knowledge and a proven track record of managing over $2 trillion in assets. This partnership minimizes risks and enhances the project's credibility, providing substantial value without incurring the high costs typically associated with such expertise.

2. Infrastructure and Network Access:

APEX’s established network of clients and intermediaries provides immediate market access and support, reducing the time and resources needed to build these connections independently. This access accelerates the adoption of tokenized gold, fostering faster integration into the Cardano ecosystem and maximizing the return on investment.

3. Proven Blockchain Success:

Liqwid Finance, the leading lending and borrowing protocol on Cardano, brings a wealth of blockchain development experience. The existing infrastructure and technological advancements developed by Liqwid ensure a robust and secure platform for tokenizing gold, leveraging existing Plutus-expertise to effectively minimize the development costs.

4. Industry Demand and Utility:

Tokenized gold has significant utility as a medium of exchange and a store of value, addressing both traditional finance needs and emerging digital asset opportunities. By tapping into the growing demand for secure, blockchain-based financial products, the project promises substantial long-term value for Cardano users and investors, driving ecosystem growth.

5. Economic Efficiency:

The project’s design emphasizes cost-effectiveness. By utilizing APEX's compliance framework and gold industry connections, along with Liqwid's technical prowess, the project avoids redundant expenses and ensures efficient use of resources. This efficiency translates into lower operational costs and higher potential returns for Cardano ecosystem‘s stakeholders.

6. Enhanced Ecosystem Security and Decentralization:

By integrating tokenized gold into Cardano, we demonstrate the viability of the Cardano blockchain to launch products for TradFi and effectively bridge it with blockchain technology. This will generate more adoption and positive feedback, thereby improving the reach of Cardano.

As Cardano grows, all stakeholders benefit, including DeFi users, DeFi protocols, ADA investors, and others. The greater the utility of the Cardano blockchain, the more valuable the network becomes. This, in turn, attracts more Stake Pool Operators (SPOs), reinforcing its decentralization and increasing the profitability of being an SPO and participating in the network’s security and decentralization.

As more assets and users engage with Cardano, the network’s resilience and robustness are strengthened, benefiting all participants and contributing to the overall stability and growth of the ecosystem.

7. Strategic Market Positioning:

Launching a tokenized gold product positions Cardano as a leader in innovative financial solutions, attracting new users and investors. This strategic move enhances Cardano’s market reputation and competitiveness, creating additional value for the ecosystem as a whole.

In summary, the project's cost is justified by the substantial value it brings through leveraging established expertise, enhancing market access, utilizing proven blockchain infrastructure, meeting industry demand, ensuring economic efficiency, and bolstering ecosystem security and decentralization.

These factors collectively ensure that the investment in tokenizing gold on Cardano delivers significant and lasting benefits to the ecosystem.