DGems use cases: opening the diamond industry to investors and offering an alternative to stablecoin market

We ride two horses, as you may see, a diamond and a crypto one

To remind you the basics: DGems is an ERC-20 token (potentially replicable on any blockchain we find convenient for the market changing needs) fully backed by investment quality diamonds stored in a vault.

Within the first year we expect to issue >$100mn worth of DGems tokens simultaneously depositing around 10,000 carats of fine cut diamonds, all of different shapes and sizes — that will be in a range of several thousands stones, depending on each stone actual size and value.

Each DGems holder will be entitled to a proportional part of this bulk of stones and will have an opportunity to physically redeem any of the stones by converting DGems tokens into those gems at a fixed rate.

By doing the above mentioned, we intend to completely revolutionize one market (the diamond one) and to seriously cure another (the market of stablecoins). Therefore, our future users come from these two areas. So are DGems use cases.

Diamonds market

Let’s start from briefly recollecting diamonds fundamental advantages as an investment:

• Diamonds are rare. Moreover, they are non-renewable — currently, it is expected that in about 60 years all existing mines will be fully depleted;
• They are hard to produce (and to discover). Last years trends show that demand will most likely sustainably exceed supply, and the industry will have little opportunities to react by bringing on extra capacities;
• Much less volatile prices. We would be bigger lover of gold if not the 40x+ ratio of paper futures versus physical delivery contracts. Diamonds are approximately 75% less volatile than gold;
• Diamonds represent the most concentrated value storage as grams and cubic millimeters are compared to price of those, they are convenient for transportation;
• The market looks very opaque for an outsider, thus, there is yet next to no investment demand on it, and prices are not affected by speculators (i.e. at their lowest).

There are millions of people and institutions around the globe who are willing to invest in diamonds and choose not to due to reasons listed below. We tend to believe that all those individuals and organizations are very natural DGems buyers and users:

1. Physical storage is risky. Being an ordinary person, you face difficulties and risks with stones: they can be stolen from your house, and banking vault may be too costly for a small set of stones. You risk being frauded both when buying and selling, and hiring an expert, again, can lift your costs. DGems token will offer you a convenient electronic form of remote ownership;
2. Today, there is no recognized price. Investment funds and family offices face obstacles of different sort and magnitude. They are capable of buying millions of dollars (thus justifying both own vaults and consultants). However, they are rare buyers of diamonds for a simple reason: absence of recognized quotation. DGems will help here on three levels:

• the token itself will have normal recognized prices on crypto exchanges;
• DGems pricing algorithm will provide online price definition for any diamond;
• on top of that all DGems diamond will be priced in DGems tokens — technically, by holding the token and monitoring DGems stock, any investor will be able to maintain his/her own customized portfolio of stone (fully redeemable at any moment).

3. Diamonds are not homogeneous. No commodities are, to be completely honest. Two bricks of gold are not chemically identical. Urals oil mixture changes hourly in terms of viscosity, sulfur and paraphene content. Frozen orange juice is even less stable in its structure. Yet, people made those assets homogenous by creating futures, indexes and other paper derivatives.

There are investors out there not willing to dive deep into diamonds and learning tiny details on depth of colour, fluorescence, transparency and so on. They want to avoid risks of individual stones but want to buy the asset class. DGems basket will be a fair representation of all major classes of diamonds, effectively forming a perfect blend of the market. The more our stock becomes, the more index-alike it will turn.

4. Liquidity and position liquidation. Above we talked about DGems institutionalization of diamonds via legal and digital wrapping for physical stones allowing for institutional investors to buy paper/digital asset instead of gems per se. There is another important factor: selling DGems token will take seconds (or minutes) and would be proceeded via crypto exchanges, as well as with any other coin. Selling of physical diamonds implies several hours of talks and up to several days of settlement.

5. Buying actual diamond at a lower prices. By buying in bulk, DGems obtains best wholesale prices possible. Thus, every single item in DGems stock is more affordable than similar stone at a retail outlet. If you are up for a particular stone, buying one of DGems’ stones with DGems token provide a 10–30% discount entrance.

These are actual prices available for DGems via our suppliers compared to retail offers on the market

Stablecoins market

Our view on stablecoins market is very simple and straightforward. Please follow our A — B — C logic:

A. Cryptomarket has an institutional need for stablecoins. One reason is investors’ need to switch from risk bearing assets into basic ones when they need to step out of the market. Moving to fiat means sticking with the particular exchange risk. Withdrawing in full limits your mobility.

B. At present, there are NO stablecoins with any backing other than fiat, aside from several MVP or very early stage examples.

C. Within fiat backed selection, 99% of opportunities (both MCap and volume size) are US dollar based. And we see at least three major concerns with any USD-based asset:

• FED policy and uncontrolled emission: you are not in control neither of the asset’s actual dilution, nor of the national debt of the title country;
• KYC/AML and regulators action: once you want to convert into the underlying asset, make sure the US government has nothing against you personally;
• Country level sanction: if you happen to be from Iran, Russia, Venezuela, Syria, East Ukraine or any other region the US suddenly doesn’t like, your’re in trouble.

Each of those reasons looks big enough to justify existence of an alternative to UDS-based stablecoins, and we believe that the market has appetite for one.

Just one chart can illustrate that USD has little connection with the United States economy: over only last 10 yeas M2 ratio to the country’s gross national product rose from 54% to 76% (with no slow down in money circulation over that period).

This brings us to a conclusion: we see a lot of real needs DGems will be able to address, both in investment area and in crypto area. Please let us know if you see any more good in our product!

About DGems

DGems is a new generation fully fiat free stablecoin 100% backed by the most liquid class diamonds. The token uses a highly secure and fully transparent emission mechanism based on top level disclosure and audit.

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