Introducing Basis Gold

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Basis Gold

3 min readJan 9, 2021

BUILD Finance is announcing the launch of Basis Gold. A protocol based on the work of Basis Cash which is itself based on the groundwork laid out by the original Basis team.

Gold has a $10 trillion market cap. Compared with the total market cap of all cryptocurrencies of about $1T (as of Jan 9, 2021), it’s about 10x larger. Most of the currently available gold tokens on Ethereum are custodial and limit the potential for getting exposure to the price of gold on the blockchain.

How Basis Gold works

Basis Gold is an algorithmic synthetic gold asset with the supply controlled and stabilized by the protocol. The protocol has 4 key tokens:

BSG: Targeting the price of gold (about $1,850 at the time of writing)
BSGS: Basis Gold Shares — receive BSG during supply expansions when the price is above the target.
BSGB: Basis Gold Bonds — burn BSG to buy BSGB at a discount when the price is below target and redeem it back to BSG when the price is above the target.
BUILD: Governance token, controlling protocol upgrades by voting

The price of BSG is measured by a combination of Uniswap TWAP (Time-weighted Average Price) and XAU/USD oracle by Chainlink.

When BSG is under the gold price target

When the BSG trades below its price target, the protocol will allow burning BSG to buy BSGB at a discount. When the price reverses back above the target, it will be possible to redeem BSGB for BSG at 1:1.

When BSG is over the gold price target

When BSG trades above the gold price target, the protocol will mint new BSG. This will first be redeemed by the bond (BSGB) holders. After all bonds are redeemed, further expansions will be directed to the share (BSGS) holders.

For further details, see the original Basis whitepaper: http://www.basis.io/basis_whitepaper_en.pdf

BUILD DAO

Basis Gold has zero founder allocation and no shares for the BUILD DAO.

Instead, BUILD DAO will receive 2% of the new seigniorage (BSG). The remaining 98% of supply expansions will be directed towards BSGS holders as described in the stabilization mechanics above.

NOTE: The DAO seigniorage % can be adjusted with BUILD governance voting.

Use of the seigniorage in the DAO is controlled by the BUILD token holders by governance voting. For example, BUILD holders may vote to distribute this seigniorage to themselves by staking or to use a part of it for further protocol development. They may also decide to reduce/increase this percentage to any other amount.

Token distribution

Basis Gold doesn’t have any pre-sale or VCs and is completely fair-launched.

The protocol starts at 0 supply of all Basis Gold tokens (excluding BUILD).

Basis Gold distribution

50 BSG will be distributed evenly over the course of 7 days to the following pools:

40 BSG distributed evenly to DAI, ESD, DSD, BAC, sXAU pools
10 BSG to BUILD/ETH pool

Keep in mind that the price of gold (BSG) is currently about $1,850 so the initial distribution of 50 BSG represents about $92.5k.

Note that during the bootstrapping period (Jan 14 until Jan 21, 2021), the price of BSG may be much higher due to the initial limited supply. After the bootstrapping ends and the stabilization mechanism starts, the price of BSG should start to stabilize.