Novem, a gold storage and asset management company, has announced its plans to conduct a public token sale, tentatively scheduled to take place in April of 2019. Novem is an Austrian-based company, incorporated in Lichtenstein, built on years of experience in the international metals industry. The project’s founders aim to establish a product that serves as an amalgamation of physical gold and blockchain.
The core vision of Novem is “to make gold accessible to everyone,” according to Christoph Klocker, Novem’s chief technology officer, who recently discussed the project with NEO News Today.
Novem’s chief executive officer, Wolfgang Schmid, and chief trading officer, Mario Schober, are the “gold bugs” of project’s leadership team and have both been in the minerals trading industry for more than ten years. At the time of writing, the co-founders already operate two gold stores, where individuals can sell their jewelry and “old gold” for fiat currency.
Novem is seeking funds to establish two primary components of its company. First, Novem aims to develop “an immutable, secure, and distributed ledger of ownership” to modernize outdated metals industry procedures. Second, the team seeks to establish “a large network of stores that operate on standardized ethical principles,” and “delivers surety for gold buyers, refiners, investors, and traders.”
In these stores, customers will be able to bring in jewelry and “old gold” to sell for fiat currency, and eventually cryptocurrency. Once Novem acquires the gold, it will then be melted and refined in a facility that can certify the gold meets London Bullion Market Association (LBMA) standards. LBMA standards ensure a gold “bar’s assay, weight, and its safe handling and stacking.”
The physical gold will back Novem’s NNN token. Currently, Novem stores its gold assets in a Loomis facility in Frankfurt, Germany. Loomis offers high-security warehouses and gives options for long-term, short-term, and in-transit storage of gold and other physical assets.
To verify there is gold backing each token created, Novem has stated it will conduct regular audits by “established and recognized firms.” Klocker said, the team is currently “talking to external auditors,” and are expecting to hire a German auditing firm in the interim. Though, in the long-term Novem will strive to have one of the Big Four accounting firms audit its gold supply. Eventually, these audit reports will be uploaded and stored on the blockchain via NeoFS, a future iteration of a NEO-based distributed storage system.
Blockchain’s role in Novem’s project
Traditionally, the gold purchasing and storing business is heavily reliant on long-standing relationships, established on trust built over time. The whitepaper states, “in the culture that the Novem founders live and do business in, trust and a handshake are worth more than any written contract.” If a handshake is worth more than a contract, why incorporate blockchain’s smart contracts for the asset class?
For one, “because, gold is expensive,” Klocker stated. The smart contract allows for a gram of gold to be tokenized, into 100 units, which now represent a fraction of the physical gold asset. He believes this access to a fraction of gold can be beneficial to investors from developing countries seeking to diversify their exposure into gold. As they might not have the capital or means for safe storage of physical gold, a tokenized version of the asset can reduce such barriers to entry. This tokenization offered by blockchain, Klocker states, is how Novem will aim to “make gold accessible to everyone.”
Novem opted to use blockchain (as opposed to a centralized database) because it solves a trust issue. Klocker said it improves transparency by maintaining a public ledger that shows “what’s happening, what’s actually in there, and what’s stored” in the Loomis facilities.
Novem selected the NEO blockchain for a variety of reasons
Klocker first learned of blockchain in 2012, via Bitcoin, and claims he more or less forgot about the technology until the rise of smart contract platforms in the past few years. At this point, Klocker began to look for his own ideas and started researching various technologies including NEO, Ethereum, Stratis, Komodo, and many more.
Novem selected the NEO blockchain not only for various technical reasons but personal as well. Klocker iterated he’d enjoyed meeting and interacting with Erik Zhang and Johnson Zhao – founder and core developer, and NEO Global Development general manager, respectively – at the NEO Berlin hackathon in October of 2018.
The Novem infrastructure requires sufficient speed with which transactions get recorded on the chain. The customer experience in a gold store should be one that prioritizes security and expedient processes. NEO’s 15 second block times were attractive to Novem, as customers will have an expected short wait time to finalize transactions.
Klocker is the lead developer for the project and also noted that NEO allows him to code in his language of preference, Python. He said, “comfort with a programming language you already know is much better than being exposed to a new one.”
Another advantage the NEO ecosystem offers Novem is the community of developers. Klocker perceives that NEO’s ecosystem of developers working together to build and propel NEO forward, as opposed to competing amongst one another for different standards. Though, this may be a double-edged sword as Klocker states, “competing standards might evolve, and get new ideas out there faster.”
Perhaps, Klocker most eagerly anticipates the development of NeoFS, which aims to provide developers the ability to store and access more substantial amounts of data. He believes this will give NEO “a huge advantage over other blockchain projects.” He goes on to say, “I think in the end for me, its the whole package that NEO brings. It’s the community, the vision, and the practicability that NEO has.”
The Novem dual token model
The project will establish two tokens to use in its ecosystem – the November token (NVM) and the 999.9 token (NNN).
The NVM token utility will be that it decreases fees on purchases made through the platform. NVM will offer a 5% discount on 1 gram gold bars, and a reduction of €0.10 per gram discounted from the market price of 5 gram gold bars or larger. Additionally, NVM tokens will offer a 2% discount off market price for NNN gold tokens.
The NVM token will also have the ability to be listed and traded on exchanges. Klocker claims there are other potential use cases for the NVM token, but that the team is not ready to announce further specificities at this time.
The 999.9 token – NNN – will be the gold-backed token and is to adhere to security token standards. In its whitepaper, Novem states that 100 NNN tokens will be equivalent to one gram of gold. The price of NNN will tie to that of gold’s, which places NNN in a “stable coin” like category, as its cost will be dependent on a traditional external asset.
NNN tokens will undergo the minting process as gold from the LBMA certified refinery is delivered to the Loomis storage facility. Further, it is the NNN tokens that will require an audit of the gold stored in Loomis, to verify that every 100 tokens have a backing of a physical gram of gold.
With regards to the upcoming public token sale, only the NVM utility tokens are to be distributed, not any of the NNN gold tokens.
Novem’s NVM public token sale
The public token sale is tentatively planned to take place in April of 2019, though the team has been raising private funds and accruing assets under management. Currently, Novem manages around 40 kilograms of gold, which is equivalent to approximately US $1.7 million in value.
In conjunction, the team has over US $3 million in assets under management from private rounds of funding. A fact which Klocker is proud of as the group has raised that amount “with just a small network” of Austrian-based investors. Further, he iterates Novem has been receiving positive feedback from individuals in the gold business who express interest in the project.
The soft cap for Novem’s public token sale is US $3.4 million, and a hard cap of US $132.6 million.
A total of 300,000,000 NVM tokens will be created, which Novem will distribute among private and public investors, the founding team, the company fund and kept in reserve.
The NVM token allocation is as follows below:
- 60% ITO + public sale + private sale participants (180,000,000 NVM)
- 20% Founding team (60,000,000 NVM)
- 15% Company fund (45,000,000 NVM)
- 5% Reserve (15,000,000 NVM)
Following the fundraising, the founding team will have a three-year vesting plan, which allows them to liquidate 25% immediately, and another 25% for each of the following three years.
The funds raised from the token sale will be used to expand Novem’s current chain of stores from two, to up to the 100 stores cited in the whitepaper. The company will first seek to expand further into the European market, starting in Liechtenstein, Switzerland, Austria, and Germany. Eventually, Novem would like to expand further into international markets.
Novem will apportion its resources funds accordingly:
- 55% for opening new stores in the previously mentioned countries
- 35% for marketing and business development activities
- 10% into the reserve
Lastly, Novem will conduct a quarterly repurchase/token burn of NVM tokens using a minimum of 10% of its annual profits. Further, a minimum of 50% of the transfer fees associated with the NNN tokens will go toward the repurchase and burn of NVM tokens. Novem will make buyback and token burn announcements via their website and social media pages.
More information about countries that face potential restrictions from participating in the public token sale will follow.
Christoph Klocker stated Novem will be attending the upcoming NEO DevCon in Seattle, US on February 16th and 17th.
Klocker stated the Novem community comprises “more or less the people that we have talked to over the last few months,” and that the project seeks to build a community with the NEO ecosystem.