Swiss Crypto Startup Eidoo Announces Token Tied to the Price of Gold

Eidoo has become the latest cryptocurrency startup to seek to create a more stable token by tying it to the price of gold.

The Switzerland-based startup says the ERC-20-compatible token, dubbed the ekon, will sit alongside its multicurrency wallet and decentralized exchange.

Perhaps more notably, each token will be redeemable for one gram of 99.9 percent fine gold, which the startup says will be stored in its vaults and audited every 90 days.

Fees for buying and selling ekon on the exchange will generate revenue for Eidoo in the form of its EDO token.

Ferrara also said that fees will be assessed if anyone wants to trade in their crypto token for an actual gram of gold.

"Each Ekon token will be backed by ... , so we will issue new tokens only if the gold is available and only if the user has completed the KYC and all the legal requirements that the Swiss law requires," Ferrara wrote.

Eidoo raised $27.9 million in a token sale last October, and its app has since become one of the more popular platforms for launching initial coin offerings.

A gold-backed token is perhaps a strange choice for a stablecoin, primarily because the metal's price itself isn't very stable.

Scott Hoch of Apex Token Fund, for example, previously argued that crypto-native investors want all their investments on a blockchain, which explains why they might favor a token over a gold exchange-traded fund.

That way, if someone using Eidoo wants to look at all their assets in one place, including a gold hedge against the risk of the crypto market, then it might help to have a token which does that for them.