Trust & Security

GGU uses 1 US dollar equivalent gold + gold to hedge short orders to build a market neutral exposure. The key points of the mechanism are as follows:

• Gold spot side: Each casting of 1 GGU corresponds to the long exposure of gold equivalent to 1 US dollars; the agreement treasury has a risk reserve account as the capital basis for hedging operations; the funds of the special account come from the regular accrual of agreement fee income, and the accrual ratio has a governance upper limit, and GGT underlying gold assets are not allowed to be used;

• Gold short order hedging end: In order to hedge gold price fluctuations, the agreement establishes a reverse position of gold short orders (spot short or derivatives short), so that gold long and short orders form a market-neutral combination, GGU The value of US dollars stabilizes at 1 US dollars; supplemented by the liquidity support of authorized market makers and the rebalancing of the liquidity pool; derivatives hedging is subject to DAO Governance votes to approve and disclose size caps and margin arrangements;

• Hedging ratio and initial exposure (truthfully disclosed): The short order margin comes from the regular accrual of the risk reserve account. The early fee income of the agreement is close to zero. When the reserves are insufficient GGU, complete hedging cannot be achieved in the early stage, and its US dollar value may deviate with the fluctuation of gold prices 1 US dollar; the agreement will gradually increase the hedging ratio as reserves accumulate, and perform hedging within the limit of existing reserves. It does not promise to fully hedge when it goes online, nor does it promise that the hedging ratio will reach any specific level; the actual exposure and hedging gap when reserves are insufficient will be disclosed to the community on a regular basis;

• Authority constraints: treasury operations must be signed by multiple signatures, and the execution team does not have the power to independently dispose of treasury assets; there is a ratio of a single-day hedging scale upper limit to a reserve usage upper limit, and operations exceeding the limit must be separately approved by DAO voting;

• Transparency: The treasury and reserve account addresses are publicly available on the chain, and the hedging operations and reserve scale are regularly disclosed to the community;

• Governance attributes: Parameters such as deviation trigger threshold, reserve accrual ratio, and single-day hedging scale upper limit can be adjusted through the DAO vote (see section 15.2 for details).

Hedge Execution and Responsibility Boundaries

The hedging operation is an off-chain execution behavior, which is separated from the on-chain issuance mechanism of GGU. Its responsibility boundaries are as follows:

Risk disclosure: The volatility suppression mechanism is designed to calm short-term price fluctuations. Spot reserves and hedging tools do not constitute any commitment or guarantee for the price of GGU. Under extreme market conditions, reserves may not be sufficient to fully hedge, and GGU prices may still fluctuate significantly (see Chapter 14 Risk Warning for details).

• The underlying assets are CSOP Gold ETF (3030.HK), which indirectly obtains physical gold exposure by holding fund shares;

• This stage relies on ETF’s mature liquidity, custody and auditing systems to achieve rapid issuance and institutional-level compliance.

• On the basis of gold ETF, physical gold bars (LBMA qualified delivery standard) directly held by the custody institution are added as the underlying assets;

• Gradually form a composite asset base of "gold ETF + physical gold bars" to reduce dependence on a single fund product and enhance the directness and redundancy of asset holdings;

• The custody arrangement, matching target and switching schedule of physical gold will be decided by DAO governance voting and announced to the community in advance;

• The adjustment of the underlying asset structure will not change the exchange ratio of 1 GGT = 0.001 ounces of gold, nor will it change the existing rights of the holders.

No matter which stage it is at, the underlying assets of GGT are based on the LBMA standard as the quality benchmark and accept regular assurance reports and audit supervision (see Chapter 5 for details).

• The minimum amount of gold to be redeemed in a single transaction is 50,000 GGT (corresponding to 50 ounces of gold);

• The minimum redemption amount can be adjusted by the DAO governance vote.

Figure 3-1: GGT gold redemption process

• Initiate an application: The holder submits an application to redeem gold on the chain and locks the corresponding amount of GGT (not less than the minimum redemption amount);

• Compliance review: The agreement conducts a review of the applicant's address KYT/KYA to confirm that it meets the redemption conditions and that the jurisdiction in which it is located allows physical gold delivery;

• Fee settlement: Handling fee is charged according to the value of the gold redeemed (the specific rate is subject to the actual situation and can be adjusted by voting by DAO), which will be deducted from the redemption amount or paid separately by the applicant in USDC/USDT;

• Physical delivery: The agreement coordinates the custodian's delivery of the corresponding weight of LBMA standard physical gold from the vault, and completes the delivery according to the delivery method selected by the applicant (self-pickup or insured transportation). Physical gold delivery is affected by gold bar specifications, minimum delivery units and custody arrangements; if there is a fractional ounce difference, it can be settled at USDC/USDT according to the agreed reference price;

• Confirmation of completion: After the custodian/logistics service provider issues a valid delivery certificate, the applicant completes the signature, or the delivery is deemed completed according to the redemption agreement, the corresponding GGT is destroyed on the chain and the redemption process ends.

• From the date the application is approved, the physical gold delivery is expected to be completed within 10 working days (self-pickup from the vault) or 20 working days (insured transportation, depending on the destination);

• In the event of force majeure or extreme market conditions, the delivery deadline may be extended, and the agreement will be notified to the applicant in a timely manner.

The above-mentioned minimum redemption amount, delivery time limit, etc. are initial parameters and can be adjusted through DAO governance voting. Additional costs such as logistics, insurance and taxes involved in redeeming gold shall be borne by the applicant.

GGT The underlying assets are segregated to the independent Marshall Islands Series LLC (RWAfi DAO LLC - Series 2). The SPV only holds the underlying assets of GGT and does not hold any external contracts except those with token holders, custodians and necessary service providers. In order to minimize the legal risk in various jurisdictions regarding the recognition of the master/series structure, this series of positions only implements long strategies (long-only).

The legal structure is clearly designed to achieve bankruptcy insularity:

• Service provider isolation: SPV and AXC (blockchain service provider) are legally independent from each other, and the claims against AXC will not extend to the assets held in SPV;

• Cross Liability Protection: GGT The Fund maintains a separate balance sheet in accordance with Marshall Islands law. Since the fund executes a long-only strategy, token holders’ potential claims will not exceed the available assets of the series. If other series of funds are expanded in the future and strategies that may generate excess liabilities are adopted, a completely independent Master DAO LLC will be established to prevent cross-jurisdictional non-recognition risks;

• Custody Segregation: Beneficial ownership of all assets vests SPV. The custodian is a licensed trust institution, ensuring that SPV assets and the custodian’s own assets are legally isolated from each other.

Although tokens do not grant holders direct equity or voting rights in the underlying fund, the "Terms and Conditions" and the "Investor Addendum" both stipulate that: To the extent permitted by applicable laws, relevant contract documents, liquidation procedures, taxes and creditor's rights settlement sequence, token holders may, in accordance with relevant contractual arrangements, receive SPV according to their holding shares in the liquidation of SPV Distribution of remaining assets (subject to liquidation costs, custody costs, outstanding debts and taxes, and subject to legal proceedings, cross-border enforcement and restricted jurisdiction restrictions). This right arises from a contractual arrangement and does not constitute a claim to equity or membership interests in SPV. The specific remedies available to holders in the event of liquidation are determined by cross-jurisdictional case law. Please consult a legal professional for specific circumstances.

For users who access products through third-party distribution channels, AXC Labs relies on licensed partners and other KYB audited distribution partners (such as neobanks neobank and regulated exchanges) to ensure regulatory compliance. These partners are responsible for enforcing end-user KYC/AML policies in accordance with their respective jurisdictions and licensing requirements.

For users who interact directly with the GGD protocol, AXC Labs ensures compliance through a robust, principles-based internal review process, including:

• Wallet screening (KYT and KYA): In the official front-end and protocol entrances such as redemption channels, user wallets must pass the KYT (Know Your Transaction) and KYA (Know Your Address) checks supported by the BlockSec Phalcon compliance suite, including based on OFAC The sanctions list and global risk database conduct real-time screening of wallet addresses and transactions, filter high-risk entities and mark suspicious fund flows; there is no transfer whitelist at the contract layer on the chain, and P2P the compliance obligations for transfers are borne by the holders themselves;

• Jurisdictional Restrictions: Users located in the United States, mainland China, or any jurisdiction currently under United Nations sanctions are strictly prohibited from interacting with the GGD protocol. To proactively enforce this policy, the GGD protocol has implemented a IP geo-blocking of all restricted areas;

• Description of the nature of screening: Protocol layer KYT/KYA screening and IP geographical restrictions are only used for address risk screening and restricted area blocking, and are not equivalent to KYC, investor suitability assessment or qualified investor certification in the traditional financial context;

• Description of restriction effect: Although the protocol adopts measures such as IP geographical blocking, address risk screening and distribution channel restrictions, the openness of assets on the chain may cause users in restricted areas to pass through unofficial channels (VPN, DEX, P2P Transfers, third-party contract interaction, etc.) contact or hold tokens; such users are not allowed to participate in agreement redemption, pledge or governance, and shall bear the legal consequences arising therefrom.

R_user = 1 + S_GGD_user ÷ S_GGD_total

• R_user: User’s personal mining rate coefficient (when GGD is not pledged, R_user = 1.0);

• S_GGD_user: The amount of GGD currently pledged by the user (including the part pledged through the node, ≥ 0);

• S_GGD_total: The total amount of GGD pledged by all users in the entire network (including threshold pledges of each node and third-party pledges, that is, the sum of user pledges and node pledges).

Stratification principle: The GGD pledged by the user only enters the personal rate R_user, and the GGD pledged by the node (including the threshold and excess part) only enters the node base rate R_node (7.5 section). The two do not repeat profit calculations to avoid double obtaining rate gains for the same GGD. It should be noted that node staking is also included in the denominator of S_GGD_total, so an increase in node staking scale will dilute the R_user of all users (see section 14.1 for details).

Taking the total network GGD pledge amount of 5,000,000 tokens as an example:

Note: The above table is an example, and the actual rate changes dynamically with the total amount of GGD pledged in the entire network. When the total amount of pledges in the entire network increases, the proportion of existing pledgers is diluted and the rate naturally drops; otherwise, it increases.

• Basic fairness: The rate of users who have not pledged GGD is always 1.0, there is no threshold premium, and all users stand on the same starting line;

• Linear transparency: The rate increment is strictly linearly positively correlated with the proportion of personal pledges in the entire network. The rules are transparent and can be verified in real time;

• Rate competition: The increase in the proportion of any user is the relative dilution of the proportion of other users, forming rate competition among users to encourage long-term holding and continuous staking GGD;

• Dynamic rebalancing: When the total amount of pledges in the entire network increases, the proportion of existing pledgers is diluted and the rate naturally drops; otherwise, it increases, and the rate is rebalanced in real time with the pledge pattern of the entire network.

• Boundedness: The formula does not contain capping parameters, and there is a mathematical upper bound on the rate 2.0: when S_GGD_user < S_GGD_total, 1.0 ≤ R_user < 2.0; only when a user is the only GGD pledger in the entire network (S_GGD_user = S_GGD_total), R_user is exactly equal to 2.0. Boundary situation: When the protocol is initially started S_GGD_total = 0, all user rates are calculated based on the basic value 1.0. Also note: If a single address holds and pledges the vast majority of GGD, although its rate is subject to a mathematical upper bound, the income distribution will still be highly concentrated, and there is a risk of governance concentration (see Chapter 14 Risk Warning for details);

• Monotonicity: R_user is strictly monotonically increasing on S_GGD_user. The pledge amount of other users in the entire network S_GGD_other = S_GGD_total − S_GGD_user is regarded as an exogenous quantity when the user makes a decision, then ∂R_user ÷ ∂S_GGD_user = S_GGD_other ÷ S_GGD_total² > 0 (when S_GGD_user < S_GGD_total), the more pledges, the higher the rate;

• Marginal decrease: The absolute rate gain of unit GGD is S_GGD_other ÷ S_GGD_total² (non-constant 1 ÷ S_GGD_total, only when its own proportion tends to 0 (approximately true), and decreases as the amount of pledges increases; the relative increase (ΔR ÷ R) also continues to decrease as the amount of pledges increases, and the greater the total amount of pledges in the entire network, the smaller the gain for the same amount of pledges, forming a natural diminishing marginal margin;

• Zero-sum: The sum of the rate increments of all staking users in the entire network Σ(R_i − 1) = Σ(S_i ÷ S_GGD_total) = 1, the total amount of rate increment allocation is constant; no new output is added at the node layer (R_node), and the share of each node subnet is only redistributed according to multiples. After superposition, the sum of the gross output of the entire network users is still equal to E_day (for details on conservation, see section 8.4.3).

Important note: Rate competition only affects the distribution ratio of mining output among users, and does not change the total amount released by the entire network mining pool - E_day is determined by the release curve of the unlocked batch (see sections 8.4.5 for details), and has nothing to do with the rate. An increase in personal velocity means obtaining a higher distribution weight per unit of pledged share, rather than creating additional output.

Figure 7-1: The relationship between personal mining rate and pledge ratio

GGD The pledge lock-up period (15 days) and the release time (24 hours) are initial parameters and can be adjusted through the DAO governance vote.

• Rate: The initial rate is 10% generated by user mining, which is unified across the entire network;

• Source: The service fee is deducted proportionally from the user's GGD mining output, without the user's additional payment; the user's gross output already includes the amplification of the node's basic rate R_node (see section 8.4.3), so the more the node pledges and the higher the user output, the greater the service fee base;

• Governable items: Service rates can be adjusted by the DAO governance vote.

Take a user's daily output of 20 GGD as an example:

User mining daily output 20 GGD │ ├── Node service fee 10% ──► Node acquisition 2 GGD │ └── Users get 90% ──► Users get 18 GGD

• Service fees constitute the core source of income for nodes, motivating nodes to continue to maintain the pledge channel and attract more users to pledge GGD;

• The larger the user scale of the node and the higher the pledge amount → the greater the total user output → the higher the node service fee income, forming a positive cycle;

• The node service rate is set uniformly by DAO and is consistent for each node; when selecting a node, users can comprehensively compare the service quality, stability and ecological support of the node to select the optimal node;

• Nodes may not promise additional income or guaranteed income; any additional incentives provided by nodes themselves are not guaranteed by the protocol.

The service rate (10%) is an initial parameter and can be adjusted through the DAO governance vote.

R_node = 1 + min[(S_node_GGD − S_min) ÷ S_GGD_total ,κ]

• R_node: Node basic rate coefficient (when only the pledge threshold amount is R_node = 1.0);

• S_node_GGD: The total amount of GGD currently pledged by this node (threshold pledge + excess pledge);

• S_min: Node threshold pledge amount, initial 10,000 GGD;

• S_GGD_total: The total amount of GGD pledged by users and nodes across the network (the same denominator as the 7.2.1 section);

• κ: Node rate capping parameter, initial 0.5, that is, the mathematical upper bound of R_node is 1.5.

Taking the total network GGD pledge amount of 5,000,000 tokens as an example:

Note: The above table is an example. The actual rate changes dynamically with the total amount of GGD pledged in the entire network; when the total amount of pledged in the entire network increases, the proportion of existing nodes is diluted and the rate naturally drops.

• Boundedness: The formula contains capping parameters κ = 0.5, R_node ∈ [1.0, 1.5]; when the proportion of node over-pledge reaches 50%, it reaches the upper bound 1.5;

• Monotonicity: R_node strictly monotonically increases to S_node_GGD (when the cap is not reached);

• Marginal Decline: The rate gain of unit GGD decreases as the node pledge amount increases, and the greater the total pledge amount of the entire network, the smaller the gain for the same pledge amount;

• Threshold neutrality: The threshold pledge amount S_min itself does not produce any rate gain. The threshold is only an access condition and does not constitute a competitive advantage.

The threshold amount (10,000 GGD), capping parameter (κ = 0.5) and lock-up period (90 days) are all initial parameters and can be adjusted through the DAO governance vote.

The actual mining output of the user is determined by the following four factors:

The user’s effective pledge share is calculated according to the following formula:

W_user = S × R_user

• S (effective pledge quantity): If GGT is pledged, S is the pledge amount; if GGU is pledged, the GGU market price will be converted into the equivalent value GGT every day and then multiplied by the 0.9 coefficient to be included, that is S = GGU Market price conversion GGT Quantity × 0.9;

• Staking method (only unlimited staking): GGT/GGU There is no time limit option for staking, only unlimited staking. Unstaking can be initiated at any time after staking (the unstaking is credited 24 hours, see section 8.5); therefore, there are no arrangements such as time weight bonus, lock-up period and early release, and the pledge share is only determined by the pledge amount and personal mining rate;

• R_user (personal mining rate): = 1 + user pledge GGD as a proportion of the total GGD pledge in the entire network (see section 7.2 for complete definition, examples and mathematical properties);

• Node subnet share: the sum of the effective shares of all users under the node, amplified by the node's basic rate and included in the denominator of the entire network:

W_subnet = R_node × Σ(W_user of users under this node)

W_total = Σ Subnet share of each node

Where R_node is the base rate of the node (see section 7.5 for complete definition). The actual allocated share of the user is W_user × R_node.

The daily GGD mining output of the entire network is distributed according to the effective pledge share of each user, and the node's basic rate acts on its subnet share in the form of multiples:

Gross user output = (W_user × R_node) ÷ W_total × E_day

W_total = Σ Subnet share of each node = Σ [R_node × Σ(W_user)] of users under this node

User take-home output = gross output × (1 − node service rate)

Conservation: W_total consists of the subnet share of each node, so Σ the gross output of all users is equal to E_day - the node base rate only changes the distribution ratio between users and does not change the total amount released by the entire network (consistent with 7.2.4 section).

• E_day: The amount of GGD mining release in the entire network on that day, determined by the number of batches within the release window on that day (see 8.4.5 section for details);

• Boundary situation - W_total = 0: If the effective pledge share of the entire network on a certain day is zero (W_total = 0), E_day will not be allocated on that day; the batch release timing proceeds normally (730 The fixed window will not be postponed), and after expiration, the unallocated amount will be automatically transferred to the reserve account and managed separately from the active mining pool balance (see sections 8.4, 5.4 and 11.3 for details);

• Boundary situation - after batch expiration: After all batches expire E_day = 0, regardless of whether W_total is zero, no output can be distributed; after the active balance of the mining pool is exhausted, DAO can decide to inject the reserved reserves into the mining pool to continue the incentive, and start repurchase replenishment for the insufficient part (see section 11.3 for details);

• W_total: The sum of the subnet shares of all nodes in the entire network (R_node amplified). The greater the amount of pledges in the entire network, the lower the output per unit share, allowing the output to be automatically adjusted with the scale of participation;

• Node service rate: initially 10%, the node obtains the service fee proportionally from the user's gross output (see section 7.4 for details).

Assume that a user pledges 1,150 GGT (unlimited pledge) through a node, and at the same time pledges 100,000 GGD (the total amount of GGD pledged on the entire network on that day 5,000,000, the personal rate is R_user = 1 + 100,000 ÷ 5,000,000 = 1.02), node service rate 10%:

• Effective pledge share: W_user = 1,150 × 1.02 = 1,173;

• Assume that the entire network on that day W_total = 11,730,000 has 2 batches in the release window on that day, E_day = 2 × 61,644 = 123,288 GGD;

• The user's gross output on the day = 1,173 ÷ 11,730,000 × 123,288 ≈ 12.33 pieces GGD;

• Node service fee = 12.33 × 10% ≈ 1.23 pieces GGD (returned to the node);

• The actual output of the user on the day is = 12.33 × 90% ≈ 11.10 pieces GGD.

If the user pledges GGU, he must first convert GGU into the amount of GGT based on the market price on the day, multiply by 0.9, and then substitute it into the above formula for calculation.

Example of node base rate: Following the above example, assume that the user pledges through node A, and node A pledges GGD 1,000,000 coins (the total amount of GGD pledged in the entire network on that day is still 5,000,000 coins):

• Node A exceeds the threshold part = 1,000,000 − 10,000 = 990,000;

• Node base rate: R_node = 1 + min(990,000 ÷ 5,000,000, 0.5) = 1.198;

• The user’s actual allocated share = W_user × R_node = 1,173 × 1.198 ≈ 1,405.25;

• Assume that the node's subnet share is W_subnet = 119,800, the entire network W_total = 11,730,000, E_day = 123,288, then the user's gross output is = 1,405.25 ÷ 11,730,000 × 123,288 ≈ 14.77 pieces GGD;

• The actual output of the user is = 14.77 × 90% ≈ 13.30 pieces GGD; the node service fee is = 14.77 × 10% ≈ 1.48 pieces GGD.

If the user changes to the node B (R_node = 1.000) that only pledges the threshold amount (10,000 GGD), and the pledged assets are exactly the same, the gross output will fall back to ≈ 12.33 pieces GGD, and the actual income will be ≈ 11.10 GGD——Due to different selected nodes, the output of the same pledge differs by about 19.8%.

The above GGU conversion coefficient (0.9), E_day release curve, etc. are all initial parameters, which are ultimately subject to the on-chain contract and can be adjusted by DAO governance voting.

E_day (the mining release amount of GGD in the entire network on that day) is determined by the superposition of each unlocking batch currently in the release period.

GGT/GGU There is only one way of staking: "Indefinite Staking". There are no time options, time weights, lock-up periods and early release arrangements:

• Can be released at any time: After staking, you can initiate release at any time, there is no lock-up period limit, and there is no early release penalty or output recalculation;

• Continuity of pledge: The pledge continues to be valid until the user actively initiates the release of the pledge. During this period, the pledge amount can be added at any time, and the additional part will be combined with the original pledge to calculate the share;

• The difference from GGD staking: The rules in this section only apply to GGT/GGU mining pledge; user GGD’s pledge is still set to 15 days’ lock-up period (section 7.2.6), node GGD’s pledge is still set The 90 day lock-up period (sections 7.5.4) is an independent time rule for governance currency pledges.

• Starting calculation rules: Mining income will start to be calculated after 24 hours have been pledged;

• Release of pledge to account: After release of pledge, the pledged assets will take 24 hours to arrive in account;

• Node GGD pledge: The lock-up period of GGD pledged by the node is 90 days (see section 7.5.4 for details), which is longer than the 15 days pledged by ordinary users; after the node unstaking is initiated R_node It fell back immediately, and its user output was calculated simultaneously according to the new R_node.

This design aims to reduce the frequent entry and exit of short-term speculative funds and maintain the stability of the pledge pool.

• Current rate: 0 (no protocol handling fee is charged, only the gas fee of the blockchain network where it is located is paid);

• Contract rules: GGT/GGU Transfer is a permissionless operation and is still subject to smart contract rules;

• Future adjustments: GGT/GGU Whether to charge transfer fees, as well as the rate level and cap value, will be decided by the community (DAO) governance vote.

• Current rate: 0 (No protocol handling fee is charged, only the gas fee of the blockchain network where it is located is paid).

The protocol currently does not charge protocol fees for on-chain transfers of GGT, GGD, and GGU. Users only need to pay the gas fee of the blockchain network where they are located to reduce the friction costs of governance participation, pledge operations, and token circulation; among which GGT and GGU Whether to charge transfer fees in the future will be decided by the community (DAO) governance vote.

• The minimum pledge amount of the node;

• Node base rate related parameters (threshold amount S_min, capping parameter κ, node GGD pledge lock period, node rate starting time);

• User node selection and switching rules (switching effective time, switching cooling period);

• GGT / GGU Transfer rate and cap value (GGT/GGU Whether to charge transfer fees in the future will be decided by community governance voting);

• GGT / GGU Various redemption rates;

• GGT↔GGU Interchange rate (including whether differentiated by direction);

• User mining rate formula parameters (base and gain coefficient; governance can also introduce capping parameters);

• Other protocol operating parameters.

• DAO Direction of use of foundation share (15%);

• Distribution and expenditure of agreement income;

• Appropriation of ecological incentives and market incentive budgets.

• Agreement on the use, retention, ecological expenditure, buyback or other disposal arrangements of revenue, surplus or treasury assets;

• The method, proportion and time node of disposal are determined by DAO governance voting.

• Core contract upgrade proposals and voting;

• Decision to launch new functional modules.

• When security risks, major vulnerabilities or extreme market conditions occur, the emergency suspension mechanism can be triggered through the governance process to protect the security of user assets.

The agreement has two levels of emergency response: temporary suspension of the Security Committee (to respond to immediate attacks) and emergency suspension proposals (to respond to major governance matters).

① Temporary suspension of the Safety Committee

② Emergency suspension proposal

• Emergency suspension proposals are subject to fast track: the voting period is shortened to 7 days and will be implemented immediately after passing (without Timelock);

• The activation of emergency suspension must meet both a higher quorum (≥ 10% of the current circulation) and a higher passing condition (≥ 2/3 i.e. 66.7% agrees), and the double threshold prevents governance capture (governance capture) and abuse;

• Suspension extension: The temporary suspension of the Safety Committee will be automatically extended until the end of the voting period after the emergency proposal is submitted (see ① for details);

• Recovery plan: After the emergency suspension proposal is passed, a separate recovery plan proposal must be submitted to explain the reasons for the suspension, repair measures and recovery timetable.

Figure 10-1: GGD governance process

The above proposal threshold, deposit amount, voting period, quorum ratio, passing conditions, Timelock duration, etc. are all initial parameters and can be adjusted through the DAO governance vote.

DAO The organization is composed of the following roles, each role has clear responsibilities and authority is governed by governance:

DAO The organization does not have a currency-holding threshold for membership - any GGD currency holder automatically has voting rights, and participation qualifications follow the "one coin, one vote" principle of 10.2.

DAO The organization’s decision-making is divided into three levels based on authority and timeliness:

• Community voting (highest decision-making power): GGD Token holders decide on major matters such as protocol parameter adjustment, treasury use, contract upgrades, emergency suspensions, etc. through the proposal-voting-execution process (see 10.1, 10.3 sections for details);

• Safety Committee (Emergency Authority): Initiate a 72 hour temporary suspension when an immediate security risk occurs, and a DAO emergency proposal must be submitted afterwards for ratification (see section 10.3.4 for details);

• Authorized executor (execution authority): Perform off-chain hedging, reserve accrual and other operations within the parameters and limits approved by governance, subject to the 3-of-5 multi-signature constraints (see 2.2.1 section for details).

• The security committee can only suspend high-risk operations, and is not allowed to transfer user assets, modify parameters, or use the treasury; DAO ratification must be submitted within 72 hours (see section 10.3.4 for details);

• Authorized executor multi-signature members are appointed and removed by voting DAO, and the execution team does not have the power to independently dispose of treasury assets (see sections 2.2.1, 10.3.4 for details);

• DAO Foundation expenditures are subject to governance proposal approval (see sections 10.1.2 for details);

• Hedging and reserve limits: The ratio of the single-day hedging scale limit and the reserve usage limit must be set by governance, and operations exceeding the limit must be separately voted by DAO (see sections 2.2.1 for details);

• Gradual decentralization: The protocol development is guided by the core team in the early stages. As the circulation of GGD deepens, the governance rights are gradually and completely transferred to the community (see sections 10.2 and 13.3 for details).

• The market price of GGD is determined by supply and demand and may fluctuate significantly, and participants may face asset losses;

• GGT Although it tracks the price of gold, the price of gold itself also fluctuates due to the influence of the international market;

• GGU Although hedging short orders with 1 USD equivalent gold + gold has stabilized fluctuations (see 2.2.1 section for details), there is still a risk of price fluctuations, especially when reserves are insufficient in the early stages of the agreement and the hedging ratio is low, its USD value may deviate from 1 USD;

• If the hedging strategy is executed incorrectly or market liquidity is insufficient, risk reserves may be lost or even exhausted, and GGU prices may deviate significantly;

• Derivatives hedging risks: Gold short orders involve the credit risk of the derivatives counterparty/exchange, funding rates and basis costs, margin calls and forced liquidation risks; if the counterparty defaults or is liquidated due to insufficient margin, the hedging becomes invalid and the value of GGU US dollars may deviate from 1 US dollars;

• The token issuer will use reasonable efforts to minimize tracking differences between GGT and the underlying CSOP Gold ETF, but tracking differences may still occur and the risk is borne by the token holder;

• The real-time liquidity framework and real-time price oracle may cause the token price to deviate from the underlying asset price;

• In the process of the evolution of the underlying asset from gold ETF to the composite structure of "ETF + physical gold", there may be risks of custody switching, operation connection and price fluctuation during the transition period.

• The protocol relies on smart contracts to run. Although the contract has undergone a third-party professional security audit, it still cannot completely eliminate unexpected risks such as vulnerabilities and attacks.

• There are uncertainties in regulatory policies regarding crypto-assets and RWA tokenization in various regions around the world, and policy changes may have a significant impact on protocol operations;

• Users located in the United States, mainland China, or United Nations sanctioned jurisdictions are prohibited from participating in this Agreement, which has implemented IP geo-blocking;

• GGU Special regulatory risk: GGU subscribes with USDC/USDT and redeems USDC/USDT with 1 US dollar reference price, which may be regarded as a stable currency/electronic currency product in many jurisdictions (including Hong Kong's Stable Coin Ordinance, etc.); the characterization of "non-stable currency" in this white paper does not determine the regulatory determination, and regulatory agencies may GGU Impose stablecoin compliance requirements (e.g. reserves, redemptions, licenses, etc.). Participants should evaluate the relevant regulatory risks by themselves, and the Agreement does not guarantee this.

• Tokens do not represent equity, ownership or trust interests in the issuer or underlying assets, and holders only have indirect economic exposure and limited legal recourse;

• Master/Series DAO LLC There is uncertainty about the recognition of the structure in some jurisdictions, and the specific remedies for holders in liquidation situations are determined by cross-jurisdictional case law.

• There is a 24 hour time rule for staking and unstaking, and participants may not be able to withdraw immediately under extreme market conditions;

• GGD pledge has a lock-up period of 15 days (section 7.2.6), and the pledge cannot be released during the lock-up period;

• GGT/GGU is pledged indefinitely and can be released at any time, but it will still take 24 hours (section 8.5.2) to release the pledge, and it may not be possible to withdraw immediately under extreme market conditions;

• There is a disclosure delay of T+5 to T+45 working days for off-chain asset information.

• DAO The voting results may not meet the expectations of individual currency holders, and there is a risk of decision-making disagreements on parameter adjustment, vault use and other matters;

• Governance concentration risk: core team (20%) + DAO foundation (15%) + private equity (5%) together account for GGD total amount 40%, relative to 45% Ecological mining share, the early governance concentration of the protocol is relatively high; before the completion of "gradual decentralization", the team and the foundation may dominate governance decisions if they coordinate, and there are risks of governance capture (governance capture) and control by a few people.

• Node concentration and the Matthew effect: user output changes with the R_node of the selected node, and high-staking nodes are more likely to absorb users and GGD pledges, forming a positive feedback of "the more pledges → the higher the rate → the more users", which may intensify the differentiation between nodes and amplify governance concentration; the capping parameter κ = 0.5 (7.5 section) is the only hard constraint and cannot completely rule out the situation where a single node aggregates a large number of pledges and users;

• The negative externality of node staking on users: GGD pledged by nodes is included in the denominator of S_GGD_total. An increase in the scale of node staking will dilute the R_user of all users. There is conflicting interest between nodes and users at the denominator level;

• Switching arbitrage risk: Under the constraints of the switching effective delay (7 days) and the cooling period (30 days), users may still periodically chase the highest R_node node, causing pledge shares to migrate between nodes and output fluctuations;

• Risk of revenue concentration: The upper bound of the output multiple of a single user is R_user (2.0) × R_node (1.5) = 3.0. In extreme cases, revenue distribution is highly concentrated;

• Node cold start dilemma: New nodes R_node = 1.0, which are equivalent to nodes that only pledge a threshold amount, may have difficulty obtaining initial users and pledges, forming a de facto barrier to entry.

• GGD Batch unlocking is triggered by the cumulative casting amount of GGT and is irreversible (see section 6.3 for details). If GGT is redeemed and destroyed in large numbers after being triggered, the actual gold reserve scale of the ecosystem may no longer match the unlocked GGD supply, and the relative reserve scale of GGD market supply may be too high; although the redemption fee and the occupation of real funds pose economic constraints to the "casting → redemption → recasting" unlocking behavior, the risk of caliber deviation under extreme circumstances cannot be completely ruled out;

• Inter-transfer brush unlocking risk: GGT cast in the GGU→GGT direction of the GGT↔GGU inter-transfer channel will be included in the cumulative casting amount (see 9.2 for details section), the attacker can use the "GGT→GGU→GGT" looping and interchanging path to increase the cumulative minting amount, thus triggering the GGD batch unlock. This path may weaken the inhibitory effect of the "redemption fee" mentioned in section 6.3 on the unlocking behavior and amplify the deviation between GGD supply and real gold reserves.

• Participating in minting, redeeming, transferring, pledging, obtaining mining rewards, mutual transfer GGT/GGU or redeeming physical gold may generate income tax, capital gains tax, value-added tax, stamp duty, customs duties, excise tax or other tax obligations in different jurisdictions. The Agreement does not provide tax advice and participants should consult their own professional tax advisors.