Digix Asks for $20 Million Worth of Eth, DAI it Say Token Holders

DigixGlobal has asked for $20 million worth of eth, amounting to around 70,000 eth from their total of circa 470,000 raised in an ICO in 2016.

The team behind DigixDAO (DGD) and Digix Gold Tokens (DGX) says they plan to expand from seven employees to 40 employees, with the funding requested to be competitive in the tokenized assets space.

They’ve courted much criticism, however, for the lack of detail in their proposal, the first of its kind for Digix.

It doesn’t quite contain any numbers, it doesn’t show estimates of amounts needed for employees, or marketing, or legal expenses, it has no budget, and doesn’t detail how the $20 million sum was derived or how long it would last.

Token holders, therefore, are left to guess with a potential anchor being the amount they have spent so far. They do not provide the figure, but it looks like they sold around 40,000 DGD tokens about a year ago when it was worth circa $3 million.

Their burn rate so far, therefore, appears to be around $250,000 a month, but that’s only if they did fund themselves only through the DGD tokens of which they still hold some 170,000 ($12 million).

Their plans for expansion might increase their burn rate, but without knowing how long they have estimated the $20 million to last, it is difficult to say what the burn rate would be exactly.

Moreover, it is unclear whether they are making any money from the tokenizing process. That’s a somewhat complex method, involving gold dealers, vaults, and so on, with it unclear from this proposal regarding just how much is spent on what and how much is received.

Around $2.5 million worth of gold has been tokenized so far after it launched this May. Since then, 114 DGX ($5,000) has been gathered in fees from tokenized gold transactions. Those fees are meant to eventually be distributed to token holders.

The DGX team has sort of gone offline this weekend to allow token holders to give their feedback on the proposal, so we were unable to reach them. Some, however, have suggested that instead of directly cashing out the eth, they could collateralize it on DAI.

The received DAI could then be turned into dollars, with the actual eth sold only to pay back the DAI if or when needed.

That idea was proposed because some token holders think eth’s price is currently too low, therefore instead of selling them now they could in a way hedge.

That hedge, however, would apply only if price does rise, with further complications regarding how the collateral would be managed.

The idea is of course that they would collateralize gradually, with the added benefit here being transparency as token holders would see just how much is being spent, instead of just giving $20 million and then perhaps not even seeing a budget sheet.

Yet whether the team is actually considering that suggestion is unclear, just as it remains unclear how they would sell this 70,000 eth if the vote does pass.

The vote begins tomorrow and ends in around two weeks on September the 4th. In the meantime the team will presumably get back with their response to the feedback.

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