Wrapped Herculis Gold Coin — version comparison

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23 Sept 2026, 17:02 UTC · PaoloDiStef · 14bc276 · assessments/draft/XAUH.md

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06 Nov 2026, 16:03 UTC · PaoloDiStef · c054ce0 · assessments/published/XAUH.md

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Structured data (36 changes)

Field	Before	After
Risk parameters
risk_parameters.retained_reserve	0.2	0.25
risk_parameters.global_minting_limit	100000	250000
risk_parameters.liquidation_price	100	—
risk_parameters.maturity	null	1 year
risk_parameters.minimum_collateral	null	—
Risk scores
risk_scores.market_risk	12.00%	12.52%
risk_scores.tail_risks.counterparty_risks[0].name	Issuer, custody and redemption dependency	Herculis Tokens S.A.
risk_scores.tail_risks.smart_contract_risks[0].name	Admin-control risk	XAUH Smart-Contract Exploit
risk_scores.tail_risks.smart_contract_risks[0].compensation	0.5%	0.50%
risk_scores.tail_risks.governance_risks[0].name	n/a	Admin-Control
risk_scores.tail_risks.governance_risks[0].probability	n/a	Very Low
risk_scores.tail_risks.governance_risks[0].severity	n/a	Critical
risk_scores.tail_risks.governance_risks[0].compensation	0%	0.50%
risk_scores.tail_risks.legal_risks[0].name	n/a	—
risk_scores.tail_risks.legal_risks[0].probability	n/a	—
risk_scores.tail_risks.legal_risks[0].severity	n/a	—
risk_scores.tail_risks.legal_risks[0].compensation	0%	—
risk_scores.tail_risks.liquidity_risks[0].name	Thin Ethereum liquidity and concentrated holder base	—
risk_scores.tail_risks.liquidity_risks[0].probability	Medium	—
risk_scores.tail_risks.liquidity_risks[0].severity	Severe	—
risk_scores.tail_risks.liquidity_risks[0].compensation	1.00%	—
risk_scores.tail_risks.contagion_risks[0].name	n/a	—
risk_scores.tail_risks.contagion_risks[0].probability	Negligible	—
risk_scores.tail_risks.contagion_risks[0].severity	n/a	—
risk_scores.tail_risks.contagion_risks[0].compensation	0%	—
risk_scores.tail_risks.smart_contract_risks[1].name	—	wXAUH Smart-Contract Exploit
risk_scores.tail_risks.smart_contract_risks[1].probability	—	Very Low
risk_scores.tail_risks.smart_contract_risks[1].severity	—	Critical
risk_scores.tail_risks.smart_contract_risks[1].compensation	—	0.50%
Links
links.etherscan	https://etherscan.io/token/0xa9b17f572341219703bc951725bdb3ca756b1a65	https://etherscan.io/token/0xC174B12B3195D9887e8dA7aA886EC11c13101060
links.coingecko	https://www.coingecko.com/en/coins/herculis-gold-coin	""
links.other	https://dexscreener.com/ethereum/0x03852AE3df6DE29ea7B9E4077cD63A3E3e14832C	https://github.com/Frankencoin-ZCHF/Frankencoin/discussions/128
General
asset_name	Herculis Gold Coin	Wrapped Herculis Gold Coin
General
asset_ticker	XAUH	wXAUH
General
contract_address	0xa9b17f572341219703bc951725bdb3ca756b1a65	0xC174B12B3195D9887e8dA7aA886EC11c13101060
General
assessment_date	2026-09-23	2026-11-06

Narrative (markdown)

assessments/{draft/XAUH.md@14bc276 → published/XAUH.md@c054ce0} RENAMED Viewed

@@ -1,135 +1,91 @@
-# Collateral Risk Assessment: Herculis Gold Coin
 ## Summary
-XAUH is a tokenized gold product issued by Herculis Tokens SA. Each XAUH token represents exposure to one gram of Swiss-stored LBMA 999.9 physical gold.
-The underlying RWA exposure is gold, which is a high-quality collateral asset with low expected market volatility.
-A conservative global minting limit of ZCHF 250,000 and an interest rate of 2.5% are however required to address XAUH's nature as a tokenized-gold wrapper with issuer, custody, redemption, admin-control risk, and limited liquidity.
-## Introduction
-XAUH is an ERC-20 token that gives holders exposure to physical gold. The issuer describes the asset as backed by Swiss-stored, insured, and audited LBMA 999.9 gold, with regular audit reports by KPMG. XAUH also exists on other networks, including TON and TRON.
-The relevant collateral exposure for Frankencoin is the Ethereum version of XAUH. Liquidity, redemption, transferability, and liquidation feasibility must therefore be assessed on the Ethereum token itself. Liquidity on TON, TRON, or other networks should not currently be counted toward Ethereum liquidation depth unless reliable cross-chain conversion is available to ordinary market participants.
-The primary liquidity therefore arises from the XAUH/USDT Uniswap pool, until the listings on BTSE and Biconomy also include the Ethereum token version (currently, only TON & TRON are available).
-## Free Float/Liquidity
 Classification: Sufficient
-XAUH has a limited free float, 86% of tokens are held on a single address, while about 9% is available in the Uniswap pool. A test transaction of 2,500 USDT worth of XAUH already incurs a 5% slippage, and a 10,000 USDT transaction a 17% slippage. The liquidity is therefore deemed to be very thin, and a challenge would require multiple rounds to liquidate a large position.
-This means a global minting limit of 100,000 ZCHF seems reasonable for the start given the limited free float available.
-At the full 100,000 ZCHF minting limit, up to 80,000 ZCHF could be withdrawn at a 20% reserve requirement.
 ## Public Information
 Classification: Strong
-Public information is strong. XAUH has a public website, whitepaper, Ethereum token contract, CoinGecko listing, and public market data.
-Since the underlying is Gold, other gold markets can be used as a reference to derive the XAUH token price with applying a potential discount for the physical redemption and delivery process.
 ## Market Risk
-99%-VaR, 96h close-to-close: 8.46%
-Maximum Drawdown, 96h close-to-close: 12.00%
-A 20% reserve is therefore defensible against historical 96h close-to-close gold-price moves and leaves an additional buffer for challenger rewards, and a potential liquidation delay.
-The underlying exposure is one gram of gold. Gold is materially less volatile than most crypto-native collateral, which supports a lower ordinary market-risk reserve than would be appropriate for crypto-native assets.
 ## Tail Risks
-### Counterparty Risk: Issuer, custody and redemption dependency
-Description: XAUH depends on Herculis as issuer, the custody of the underlying gold, and the operational process linking the token to the physical gold.
-Probability: Low
 Severity: Severe
 Compensation: 1.00%
-XAUH is a tokenized wrapper whose value depends on the issuer, custody structure, reserve documentation, redemption process, and market confidence.
-A failure in any of these components could impair the token relative to the underlying gold price. This risk is materially higher than for larger tokenized-gold products with longer operating histories and deeper liquidity. A 1.00% compensation is therefore assigned for issuer, custody, and redemption dependency.
-### Smart Contract Risk: Admin-control risk
-Description: XAUH depends on an upgradeable Ethereum token contract with issuer-admin functionality.
-Probability: Low
 Severity: Critical
 Compensation: 0.50%
-The Ethereum token contract is an upgradeable proxy and includes administrative controls. Reviewed functionality indicates controls such as freeze, unfreeze, wipe of frozen addresses, pause, unpause, supply adjustment, supply-controller assignment, asset-protection role assignment, and fee-controller functions.
-Such controls are common for centrally issued RWA tokens, but they introduce dependency on correct administration, secure key management, and predictable issuer behaviour. A contract-level issue, malicious upgrade, compromised admin key, pause, freeze, wipe, or supply-control error could impair transferability, settlement, or liquidation proceeds. A 0.75% compensation is assigned for smart-contract and admin-control risk.
-### Governance Risk: n/a
-Description: No separate governance-risk premium is assigned.
-Probability: n/a
-Severity: n/a
-Compensation: 0%
-XAUH is centrally issued rather than governed by a decentralized protocol. The relevant control risks are captured under counterparty, smart-contract/admin-control, and liquidity risk. No separate governance-risk premium is assigned to avoid double-counting.
-### Legal Risk: n/a
-Description: No separate legal-risk premium is assigned in the current classification.
-Probability: n/a
-Severity: n/a
-Compensation: 0%
-Legal and redemption enforceability are relevant for XAUH, especially around holder eligibility, redemption rights, transfer restrictions, custody claims, and whether an auction buyer can reliably receive, hold, transfer, or redeem XAUH.
-For the current parameter set, this risk is treated as part of the issuer, custody, and redemption dependency rather than as a separate premium. If the legal terms create additional restrictions for ordinary auction buyers, the parameters should be reassessed.
-### Liquidity Risk: Thin Ethereum liquidity and concentrated holder base
-Description: Ethereum XAUH liquidity is limited, and the holder base currently very concentrated.
-Probability: Medium
-Severity: Severe
-Compensation: 1.00%
-The practical Ethereum liquidity source is currently the Uniswap pool. TON and TRON liquidity cannot currently be treated as immediately available for Ethereum liquidations. The issuer has also indicated that bridging is not yet possible for users and primarily available to the issuer.
-This means that a Frankencoin liquidation could face meaningful slippage, execution delay, or dependence on a small buyer universe. The 48h auction duration is therefore appropriate. A 1.00% compensation is assigned for liquidity risk.
-### Contagion Risk: n/a
-Description: No separate contagion-risk premium is assigned.
-Probability: Negligible
-Severity: n/a
-Compensation: 0%
-No separate contagion-risk premium is assigned as XAUH does not depend on crypto markets and has no other Defi integrations.
 ## Conclusion
-The proposed retained reserve of 20% is appropriate relative to the observed 12.00% worst 96h close-to-close gold drawdown and leaves a substantial buffer for liquidation execution. It should not be interpreted as protection against issuer, custody, redemption, admin-control, or liquidity tail risks. Those risks are addressed primarily through the proposed 100,000 ZCHF global minting limit and the 2.75% target interest rate.
-The target interest rate of 2.5% is justified by the selected risk premia: 1.00% for issuer, custody, and redemption dependency, 0.5% for smart-contract and admin-control risk, and 1.00% for thin Ethereum liquidity and holder concentration.
-The proposed 100,000 ZCHF global minting limit is the primary safeguard as long as the free float of the token is so limited. The issuer has however indicated plans of growing the Ethereum version with additional integrations and CEX listings. A higher global minting limit should then be possible.

+# Collateral Risk Assessment: Wrapped Herculis Gold Coin
 ## Summary
+wXAUH is a no transfer-fee wrapper of XAUH. Each wXAUH represents one XAUH, and each XAUH represents exposure to one gram of Swiss-stored LBMA 999.9 physical gold. wXAUH was created because XAUH’s fee-on-transfer mechanics are not compatible with the Frankencoin collateral flow.
+The underlying exposure is high-quality and relatively low-volatility, but wXAUH remains exposed to issuer, custody, smart-contract and admin-control risk. The 25% retained reserve addresses ordinary gold-price volatility and a potential liquidation discount. The 250,000 ZCHF global minting limit and 2.5% effective interest rate are the main safeguards against these tail risks.
+## Asset Overview
+wXAUH can be wrapped and unwrapped one-for-one against XAUH. The wrapper does not charge a transfer fee. A 0.02% fee applies when wrapping or unwrapping XAUH, so an auction buyer that unwraps wXAUH receives slightly less than one XAUH per token.
+Herculis Tokens S.A., a Panamanian company, is the issuer and primary-market counterparty behind XAUH. It is part of Herculis Group, a Swiss wealth-management and asset-protection boutique established in 2009. The issuer’s terms describe XAUH as a contractual right against Herculis.
+The gold is stored in Switzerland and KPMG has verified the gold amount in custody through various reserve reports. The latest report from 28 August 2026 recorded 18 certificates representing 15.5 kg of gold, matching the outstanding token supply.
+KYC-verified holders may request physical redemption of underlying XAUH from 500 XAUH. The stated redemption fee is 3% at 500 g and 1% from 1 kg, in addition to delivery, security, insurance, customs and other third-party costs. Redemption may be delayed or refused for compliance, sanctions, legal, logistical or operational reasons.
+## Free Float
 Classification: Sufficient
+wXAUH can be wrapped and unwrapped one-for-one against XAUH. Its relevant liquidity is therefore that of underlying XAUH.
+XAUH is listed on Biconomy and BTSE, and Ethereum XAUH has Uniswap liquidity. XAUH on TON has liquidity on Ston.fi and Capital DEX. Changelly, ChangeNOW and Wert provide additional XAUH purchase integrations. A majority of XAUH supply is currently not on Ethereum, and only Herculis can bridge tokens across chains for users. XAUH also has a primary issuance route for KYC-approved customers contributing eligible physical gold or fiat. These routes provide sufficient ways for challengers to acquire XAUH and wrap it into wXAUH.
+The current Ethereum market depth and the 500 XAUH physical-redemption process however limit the expected efficiency of an auction. This is addressed by the 25% retained reserve and the 250,000 ZCHF global minting limit.
 ## Public Information
 Classification: Strong
+Gold has an observable and liquid underlying market. Herculis publishes token documentation, terms, a white paper and periodic information on the bullion backing. The wXAUH conversion is one-to-one with XAUH. The price source used for the partner venues is Chainlink’s XAU/USD feed converted to a per-gram XAUH price. These inputs allow challengers to estimate a likely auction value by starting from the gold price and applying a discount for redemption delay and costs.
 ## Market Risk
+Worst 48h close-to-close drawdown observed: 12.52%
+The 25% retained reserve is above the observed gold-market decline and provides an additional buffer for the challenger reward and the costs of redeeming underlying XAUH.
 ## Tail Risks
+### Counterparty Risk: Herculis Tokens S.A.
+Likelihood: Medium
 Severity: Severe
 Compensation: 1.00%
+wXAUH'w value depends on Herculis Tokens S.A. as issuer, the custody of the underlying gold, the redemption process and market confidence. A failure in any of these components could impair wXAUH relative to the underlying gold price.
+### Smart-Contract Risk: XAUH Smart-Contract Exploit
+Likelihood: Very Low
 Severity: Critical
 Compensation: 0.50%
+wXAUH is backed by XAUH. A defect or exploit in the XAUH token accounting or authorisation logic could allow an unauthorised transfer, mint or burn, or prevent the underlying token from settling correctly.
+Such a technical failure could impair the value or recoverability of wXAUH even if the wrapper contract itself continues to function.
+### Smart-Contract Risk: wXAUH Smart-Contract Exploit
+Likelihood: Very Low
+Severity: Critical
+Compensation: 0.50%
+wXAUH is a wrapper contract that holds XAUH and issues the corresponding wrapped balance. A defect or exploit in its wrapping, unwrapping, accounting or transfer logic could break the one-to-one relationship with XAUH or prevent collateral from being transferred and auctioned.
+The Frankencoin team’s mainnet-fork tests confirmed the intended transfer, approval, position, challenge, bid and forced-sale flows. The residual risk is a failure in the deployed wrapper contract or its integration path.
+### Governance Risk: Admin-Control
+Likelihood: Very Low
+Severity: Critical
+Compensation: 0.50%
+The underlying XAUH token is controlled by a 3-of-4 Safe for token ownership and supply control, while a separate 3-of-4 Safe controls proxy upgrades. The owner Safe can pause transfers, appoint an asset-protection role and replace the supply controller.
+An appointed asset-protection role can freeze an address and wipe the balance of a frozen address. The proxy-admin Safe can replace the token logic entirely. These powers can make the XAUH backing held by the wrapper untransferable or destroy it on-chain, impairing wXAUH collateral.
 ## Conclusion
+The 25% retained reserve is appropriate relative to the 12.52% worst 48h close-to-close drawdown observed for the underlying gold market and leaves a substantial buffer for the underlying XAUH execution route, redemption fees and settlement friction. The 2.50% effective interest rate compensates the Herculis Tokens S.A. counterparty risk, XAUH and wXAUH smart-contract risk, and admin-control risk. The 250,000 ZCHF global minting limit restricts the maximum withdrawable amount to 187,500 ZCHF and contains exposure to the issuer, custody and redemption risk. wXAUH’s Sufficient Free Float supports a 48 hour auction duration, and a maturity of 1 year is appropriate before reassessment.

assessments/{draft/XAUH.md@14bc276 → published/XAUH.md@c054ce0} RENAMED Viewed

@@ -1,135 +1,91 @@
-# Collateral Risk Assessment: Herculis Gold Coin
+# Collateral Risk Assessment: Wrapped Herculis Gold Coin
 ## Summary
-XAUH is a tokenized gold product issued by Herculis Tokens SA. Each XAUH token represents exposure to one gram of Swiss-stored LBMA 999.9 physical gold.
+wXAUH is a no transfer-fee wrapper of XAUH. Each wXAUH represents one XAUH, and each XAUH represents exposure to one gram of Swiss-stored LBMA 999.9 physical gold. wXAUH was created because XAUH’s fee-on-transfer mechanics are not compatible with the Frankencoin collateral flow.
-The underlying RWA exposure is gold, which is a high-quality collateral asset with low expected market volatility.
+The underlying exposure is high-quality and relatively low-volatility, but wXAUH remains exposed to issuer, custody, smart-contract and admin-control risk. The 25% retained reserve addresses ordinary gold-price volatility and a potential liquidation discount. The 250,000 ZCHF global minting limit and 2.5% effective interest rate are the main safeguards against these tail risks.
-A conservative global minting limit of ZCHF 250,000 and an interest rate of 2.5% are however required to address XAUH's nature as a tokenized-gold wrapper with issuer, custody, redemption, admin-control risk, and limited liquidity.
+## Asset Overview
-## Introduction
+wXAUH can be wrapped and unwrapped one-for-one against XAUH. The wrapper does not charge a transfer fee. A 0.02% fee applies when wrapping or unwrapping XAUH, so an auction buyer that unwraps wXAUH receives slightly less than one XAUH per token.
-XAUH is an ERC-20 token that gives holders exposure to physical gold. The issuer describes the asset as backed by Swiss-stored, insured, and audited LBMA 999.9 gold, with regular audit reports by KPMG. XAUH also exists on other networks, including TON and TRON.
+Herculis Tokens S.A., a Panamanian company, is the issuer and primary-market counterparty behind XAUH. It is part of Herculis Group, a Swiss wealth-management and asset-protection boutique established in 2009. The issuer’s terms describe XAUH as a contractual right against Herculis.
-The relevant collateral exposure for Frankencoin is the Ethereum version of XAUH. Liquidity, redemption, transferability, and liquidation feasibility must therefore be assessed on the Ethereum token itself. Liquidity on TON, TRON, or other networks should not currently be counted toward Ethereum liquidation depth unless reliable cross-chain conversion is available to ordinary market participants.
+The gold is stored in Switzerland and KPMG has verified the gold amount in custody through various reserve reports. The latest report from 28 August 2026 recorded 18 certificates representing 15.5 kg of gold, matching the outstanding token supply.
-The primary liquidity therefore arises from the XAUH/USDT Uniswap pool, until the listings on BTSE and Biconomy also include the Ethereum token version (currently, only TON & TRON are available).
+KYC-verified holders may request physical redemption of underlying XAUH from 500 XAUH. The stated redemption fee is 3% at 500 g and 1% from 1 kg, in addition to delivery, security, insurance, customs and other third-party costs. Redemption may be delayed or refused for compliance, sanctions, legal, logistical or operational reasons.
-## Free Float/Liquidity
+## Free Float
 Classification: Sufficient
-XAUH has a limited free float, 86% of tokens are held on a single address, while about 9% is available in the Uniswap pool. A test transaction of 2,500 USDT worth of XAUH already incurs a 5% slippage, and a 10,000 USDT transaction a 17% slippage. The liquidity is therefore deemed to be very thin, and a challenge would require multiple rounds to liquidate a large position.
+wXAUH can be wrapped and unwrapped one-for-one against XAUH. Its relevant liquidity is therefore that of underlying XAUH.
-This means a global minting limit of 100,000 ZCHF seems reasonable for the start given the limited free float available.
+XAUH is listed on Biconomy and BTSE, and Ethereum XAUH has Uniswap liquidity. XAUH on TON has liquidity on Ston.fi and Capital DEX. Changelly, ChangeNOW and Wert provide additional XAUH purchase integrations. A majority of XAUH supply is currently not on Ethereum, and only Herculis can bridge tokens across chains for users. XAUH also has a primary issuance route for KYC-approved customers contributing eligible physical gold or fiat. These routes provide sufficient ways for challengers to acquire XAUH and wrap it into wXAUH.
-At the full 100,000 ZCHF minting limit, up to 80,000 ZCHF could be withdrawn at a 20% reserve requirement.
+The current Ethereum market depth and the 500 XAUH physical-redemption process however limit the expected efficiency of an auction. This is addressed by the 25% retained reserve and the 250,000 ZCHF global minting limit.
 ## Public Information
 Classification: Strong
-Public information is strong. XAUH has a public website, whitepaper, Ethereum token contract, CoinGecko listing, and public market data.
+Gold has an observable and liquid underlying market. Herculis publishes token documentation, terms, a white paper and periodic information on the bullion backing. The wXAUH conversion is one-to-one with XAUH. The price source used for the partner venues is Chainlink’s XAU/USD feed converted to a per-gram XAUH price. These inputs allow challengers to estimate a likely auction value by starting from the gold price and applying a discount for redemption delay and costs.
-Since the underlying is Gold, other gold markets can be used as a reference to derive the XAUH token price with applying a potential discount for the physical redemption and delivery process.
 ## Market Risk
-99%-VaR, 96h close-to-close: 8.46%
+Worst 48h close-to-close drawdown observed: 12.52%
-Maximum Drawdown, 96h close-to-close: 12.00%
+The 25% retained reserve is above the observed gold-market decline and provides an additional buffer for the challenger reward and the costs of redeeming underlying XAUH.
-A 20% reserve is therefore defensible against historical 96h close-to-close gold-price moves and leaves an additional buffer for challenger rewards, and a potential liquidation delay.
-The underlying exposure is one gram of gold. Gold is materially less volatile than most crypto-native collateral, which supports a lower ordinary market-risk reserve than would be appropriate for crypto-native assets.
 ## Tail Risks
-### Counterparty Risk: Issuer, custody and redemption dependency
+### Counterparty Risk: Herculis Tokens S.A.
-Description: XAUH depends on Herculis as issuer, the custody of the underlying gold, and the operational process linking the token to the physical gold.
+Likelihood: Medium
-Probability: Low
 Severity: Severe
 Compensation: 1.00%
-XAUH is a tokenized wrapper whose value depends on the issuer, custody structure, reserve documentation, redemption process, and market confidence.
+wXAUH'w value depends on Herculis Tokens S.A. as issuer, the custody of the underlying gold, the redemption process and market confidence. A failure in any of these components could impair wXAUH relative to the underlying gold price.
-A failure in any of these components could impair the token relative to the underlying gold price. This risk is materially higher than for larger tokenized-gold products with longer operating histories and deeper liquidity. A 1.00% compensation is therefore assigned for issuer, custody, and redemption dependency.
+### Smart-Contract Risk: XAUH Smart-Contract Exploit
-### Smart Contract Risk: Admin-control risk
+Likelihood: Very Low
-Description: XAUH depends on an upgradeable Ethereum token contract with issuer-admin functionality.
-Probability: Low
 Severity: Critical
 Compensation: 0.50%
-The Ethereum token contract is an upgradeable proxy and includes administrative controls. Reviewed functionality indicates controls such as freeze, unfreeze, wipe of frozen addresses, pause, unpause, supply adjustment, supply-controller assignment, asset-protection role assignment, and fee-controller functions.
+wXAUH is backed by XAUH. A defect or exploit in the XAUH token accounting or authorisation logic could allow an unauthorised transfer, mint or burn, or prevent the underlying token from settling correctly.
-Such controls are common for centrally issued RWA tokens, but they introduce dependency on correct administration, secure key management, and predictable issuer behaviour. A contract-level issue, malicious upgrade, compromised admin key, pause, freeze, wipe, or supply-control error could impair transferability, settlement, or liquidation proceeds. A 0.75% compensation is assigned for smart-contract and admin-control risk.
+Such a technical failure could impair the value or recoverability of wXAUH even if the wrapper contract itself continues to function.
-### Governance Risk: n/a
+### Smart-Contract Risk: wXAUH Smart-Contract Exploit
-Description: No separate governance-risk premium is assigned.
+Likelihood: Very Low
-Probability: n/a
+Severity: Critical
-Severity: n/a
+Compensation: 0.50%
-Compensation: 0%
+wXAUH is a wrapper contract that holds XAUH and issues the corresponding wrapped balance. A defect or exploit in its wrapping, unwrapping, accounting or transfer logic could break the one-to-one relationship with XAUH or prevent collateral from being transferred and auctioned.
-XAUH is centrally issued rather than governed by a decentralized protocol. The relevant control risks are captured under counterparty, smart-contract/admin-control, and liquidity risk. No separate governance-risk premium is assigned to avoid double-counting.
+The Frankencoin team’s mainnet-fork tests confirmed the intended transfer, approval, position, challenge, bid and forced-sale flows. The residual risk is a failure in the deployed wrapper contract or its integration path.
-### Legal Risk: n/a
+### Governance Risk: Admin-Control
-Description: No separate legal-risk premium is assigned in the current classification.
+Likelihood: Very Low
-Probability: n/a
+Severity: Critical
-Severity: n/a
+Compensation: 0.50%
-Compensation: 0%
+The underlying XAUH token is controlled by a 3-of-4 Safe for token ownership and supply control, while a separate 3-of-4 Safe controls proxy upgrades. The owner Safe can pause transfers, appoint an asset-protection role and replace the supply controller.
-Legal and redemption enforceability are relevant for XAUH, especially around holder eligibility, redemption rights, transfer restrictions, custody claims, and whether an auction buyer can reliably receive, hold, transfer, or redeem XAUH.
+An appointed asset-protection role can freeze an address and wipe the balance of a frozen address. The proxy-admin Safe can replace the token logic entirely. These powers can make the XAUH backing held by the wrapper untransferable or destroy it on-chain, impairing wXAUH collateral.
-For the current parameter set, this risk is treated as part of the issuer, custody, and redemption dependency rather than as a separate premium. If the legal terms create additional restrictions for ordinary auction buyers, the parameters should be reassessed.
-### Liquidity Risk: Thin Ethereum liquidity and concentrated holder base
-Description: Ethereum XAUH liquidity is limited, and the holder base currently very concentrated.
-Probability: Medium
-Severity: Severe
-Compensation: 1.00%
-The practical Ethereum liquidity source is currently the Uniswap pool. TON and TRON liquidity cannot currently be treated as immediately available for Ethereum liquidations. The issuer has also indicated that bridging is not yet possible for users and primarily available to the issuer.
-This means that a Frankencoin liquidation could face meaningful slippage, execution delay, or dependence on a small buyer universe. The 48h auction duration is therefore appropriate. A 1.00% compensation is assigned for liquidity risk.
-### Contagion Risk: n/a
-Description: No separate contagion-risk premium is assigned.
-Probability: Negligible
-Severity: n/a
-Compensation: 0%
-No separate contagion-risk premium is assigned as XAUH does not depend on crypto markets and has no other Defi integrations.
 ## Conclusion
-The proposed retained reserve of 20% is appropriate relative to the observed 12.00% worst 96h close-to-close gold drawdown and leaves a substantial buffer for liquidation execution. It should not be interpreted as protection against issuer, custody, redemption, admin-control, or liquidity tail risks. Those risks are addressed primarily through the proposed 100,000 ZCHF global minting limit and the 2.75% target interest rate.
-The target interest rate of 2.5% is justified by the selected risk premia: 1.00% for issuer, custody, and redemption dependency, 0.5% for smart-contract and admin-control risk, and 1.00% for thin Ethereum liquidity and holder concentration.
-The proposed 100,000 ZCHF global minting limit is the primary safeguard as long as the free float of the token is so limited. The issuer has however indicated plans of growing the Ethereum version with additional integrations and CEX listings. A higher global minting limit should then be possible.
+The 25% retained reserve is appropriate relative to the 12.52% worst 48h close-to-close drawdown observed for the underlying gold market and leaves a substantial buffer for the underlying XAUH execution route, redemption fees and settlement friction. The 2.50% effective interest rate compensates the Herculis Tokens S.A. counterparty risk, XAUH and wXAUH smart-contract risk, and admin-control risk. The 250,000 ZCHF global minting limit restricts the maximum withdrawable amount to 187,500 ZCHF and contains exposure to the issuer, custody and redemption risk. wXAUH’s Sufficient Free Float supports a 48 hour auction duration, and a maturity of 1 year is appropriate before reassessment.