• Metallurgy Gold (MGLD-USD) is a cryptocurrency project based on building an ecosystem based on gold.
• The tokenomics focuses on rewarding the community for active users to hold and earn by redistributing eGold and physical gold, making it an interesting way to earn passive income.
• Investors should perform more due diligence and not buy MGLD tokens, as the trading activity remains too low.

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Metallurgy Gold (MGLD-USD) is a relatively new cryptocurrency, launched in late 2021. It may be very interesting for investors who are advocates of the cryptocurrency market and who are seeking plausible arguments to join in new investment ideas.

For Metallurgy Gold, this argument is the concept of building a “Gold Finance Decentralized Token For The Web 3 Economy.” It plans to reward its active community with redistributions in both eGold and physical gold and to build a gold market platform. A decentralized financial system based on gold certainly has potential in the form of utility for this cryptocurrency.

Gold is considered a safe haven in times of uncertainty, an inflation hedge and a generally accepted form of payment, having a very important role in the international monetary system.

What does the MGLD token have to offer to its potential investors to differente it from tons of other cryptocurrency projects? Here are some key facts to know.

What Is Metallurgy Gold?

Metallurgy Gold is a decentralized gold project on the Binance Smart Chain. It is a platform for selling or buying gold, silver and other precious metals, by purchasing the MGLD token using the Binance Smart Chain decentralized ecosystem.

The concept for this gold market is to provide international gold stores with opportunities to sell their products worldwide, making gold more widely accessible.

Metallurgy Gold platform is also developing its non-fungible token (NFT) marketplace with notable features like easily minting digital art at low fees; buying or selling digital art; and storing that art. Each user will have the ability to mint their own NFT and post it on the marketplace.

A strong focus is given to these digital assets, but Metallurgy Gold does not stop there. It’s also working on a shop where you can buy its brand of clothes, hopefully helping to strengthen its brand name.

The MGLD Binance Smart Chain token is the key to sustaining the growth of this decentralized gold-based ecosystem. It is notable to mention that Metallurgy Gold has “locked liquidity on DxSale” for 18 years, as a statement to its commitment to stay for the long-term.

Metallurgy Gold a New Way for Passive Income Generation

Investors in cryptocurrencies can buy in for many reasons — speculation, high-yielding opportunities, or even (as Metallurgy Gold is supporting) a way to generate passive income.

Investors in MGLD tokens can hold and earn, as there is a redistribution of Elrond (EGLD-USD), or eGold. The company says 7% of EGLD from each transaction is automatically redistributed to MGLD holders.

There is an emphasis on liquidity and growth of the ecosystem, as the tokenomics mention that 1% from each transaction will go to the PancakeSwap liquidity pool and additionally 3% will be used for “marketing and project growth.”

The website states that “Hold is Gold.” The goal is for holders to be able to generate passive income, grow wealth and ultimately achieve their financial goals.

Do Not Buy MGLD Yet — Severe Risks Are Present

The whole decentralized gold finance ecosystem seems interesting, but there are two main risks to be aware of now.

First Metallurgy Gold mentions that “Our contracts are made to be hyper-deflationary, over time the value can only grow, with fluctuations of course.”

The cryptocurrency market is well-known for its high volatility though, so although the redistribution mechanism is promising, it does not guarantee that wealth or capital appreciation will be achieved over time. The Elrond token is not stable, but is seeing wild price swings. It was trading at nearly $245 in early January and dipped to $118 by late January. It has since rebounded back to a price of approximately $188.

Second, there is not any meaningful trading activity for the MGLD token presently.

This is a great risk for investors. Illiquidity is a factor suggesting you should stay away from any financial asset, even if it’s suggested for a long-term hold. You should be able at any time to get in and out of investing in any asset, as this minimizes the risk of getting trapped in undesired position due to external factors.

Another reason I would suggest investors now avoid investing in Metallurgy Gold is the huge suggested slippage of 17%.

In a stronger asset, slippage should be as minimal as possible.

On the date of publication, Stavros Georgiadis, CFA  did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.