Two-Way Marketplace Unlocks $10B Market for Diamond Investors Seeking Asset Diversification, Dramatically Lowers Bid/Ask Spread
Icecap, the pioneering platform for tokenizing diamonds on the Ethereum blockchain, today announced the launch of its bid/ask trading marketplace targeting diamond investors. Icecap uses the Ethereum ERC721 Non-Fungible Token (NFT) standard to give GIA-graded and GCAL-verified diamonds their own digital tokens, which represent the rights to a single specific diamond stored in a vault. These tokens then function as globally-tradeable assets on crypto marketplaces such as OpenSea.io.
“We believe there is currently a $10 billion potential market opportunity for investors to diversify into diamond assets, a market that until now has largely been untapped,” said Jacques Voorhees, Icecap’s founder and CEO. “Until now, the diamond industry has been structured as a one-way flow of diamonds from mine to consumer. But a diamond investor needs to sell as well as buy, and today that means buying at retail and selling at below wholesale, to a dealer, retailer, auction house, or perhaps even to a pawnshop. In that scenario an investor might lose fifty percent or more of the purchase price of the stone. That dynamic is what has made diamonds to date untenable for asset diversification.”
Blockchain technology, and in particular tokenization using the ERC721 standard, solves the problem. “Icecap can now mint a unique digital token and assign it to a specific diamond. The token is then traded easily, back and forth, on marketplaces like OpenSea where it incurs only a 1% exchange fee. The token can be redeemed for the diamond at any time by the owner of the token. The calculation for size of the potential investment market is based on the current percentage of demand for gold that is represented by investors (30%), then applying that same percentage to the size of the global wholesale diamond market. Such a level of investment demand would increase that global market from $25 billion today, to over $35 billion.
Icecap brings together some of the best-known names from the diamond and crypto industries. Jacques Voorhees was the founder of Polygon, the disruptive platform which introduced online trading to the conservative diamond market in the 1980’s. His son Erik, an investor in Icecap, is the well-known founder and CEO of ShapeShift, one of the most popular digital asset platforms. Chairman of Icecap is Bill Boyajian, former president of the Gemological Institute of America itself, which invented the popular system of diamond grading known as the 4C’s.
“With Icecap, we are resurrecting and re-defining the phrase ‘investment grade’ diamond. An investment grade diamond is one that not merely rates well on the 4C’s grading scale (generally I or better, VS2 or better, Triple Excellent cut grade) but which has also been verified to even further exacting standards by the GCAL lab in New York. Specifically GCAL provides an audit of the GIA grading report, guarantees the grading, and backs up that guarantee with an insurance policy—the only diamond lab in the world that provides this service.”Jacques Voorhees, CEO, Icecap
“The truth is, the 4C’s don’t measure everything, which is why today—for example—a 1 carat, G, VS2 search on a single popular e-tail site will produce hundreds of diamonds at completely different prices, from $5,000 to $8,000 per carat – how is this possible? Because the stones are vastly different in quality, in ways not measured by the 4C’s. For example, some have clouds, graining, open feathers, fluorescence issues, visible carbon in the center and more. At Icecap, we screen out these ‘problem stones,’ and that’s why we call Icecap diamonds, which all must pass the highest GCAL standards, ‘investment grade.’ These quality stones are simply easier to sell, albeit at a slightly higher price. Such liquidity is critical in the investment marketplace.”Jacques Voorhees, CEO, Icecap
Icecap is launching its diamond tokens on the OpenSea platform, ranging in price from under $2,500 to a ten-carat diamond worth almost $1 million. The company is fully compliant with the Kimberley Process (KPCS) chain of warranties, established in 2003 to prevent conflict diamonds from entering the supply chain.
A buyer of a token can store it in their own digital wallet indefinitely, can offer it again on OpenSea with a new asking price and await offers, or can redeem it and receive the actual diamond. A redeemed diamond can later be re-tokenized for a small fee, then placed back into the marketplace. The diamonds themselves, until and unless redeemed, are stored in a vault in New York City’s diamond district, insured by AXA XL, one of the largest global insurers in the world.
Icecap, LLC, created in January 2020 and opening for business July 15, is the first company to use the ERC721 Non-Fungible Token (NFT) standard to provide a revolutionary way to buy and sell diamonds. By making the tokens tradeable, while the diamond is kept in a secure vault (redeemable at any time), the normal friction for diamond investors is removed, and the buy/sell spreads are reduced from around fifty percent, to possibly as low as one percent. Icecap buys diamonds on the wholesale market, creates tokens which each represent a claim on a given diamond, and sells those tokens on the OpenSea marketplace, at or below normal e-tail price levels for comparable stones. www.icecap.diamonds
Gem Certification & Assurance Lab, Inc. (GCAL) offers a unique suite of certification, identification, valuation, and forensic services for diamonds, gemstones, and jewelry. GCAL’s expertise is regularly sought by international banks, government and law enforcement agencies, insurance underwriters, law and accounting firms, public and private institutions, and the news media for identification, quality rating, valuation and auditing of fine gems and jewelry. GCAL is the only ISO 17025 Accredited Forensic Laboratory in the field of Diamond, Gemstone, and Jewelry testing. GCAL is the only diamond grading laboratory to actually guarantee the accuracy of its grading and verification services, and to back that guarantee up with an insurance policy. www.GCALUSA.com
The Gemological Institute of America (GIA) is the world’s foremost authority in gemology. As educators to the world’s gemstone professionals, it is the leading educational institute for the gem and jewelry industry, the leading research organization in gemology, and the leading diamond grading laboratory in the world. As a 501(c)3 nonprofit public benefit corporation, GIA is an unbiased arbiter of grading and identification in diamonds and gems. www.gia.edu.
OpenSea was founded in 2017 and is the first peer-to-peer marketplace for blockchain-based assets, which include collectibles, gaming items, digital art, domain names, event tickets, and physical assets backed by a blockchain. On OpenSea, users can buy and sell any of these digital assets through a smart contract on Ethereum using a variety of auction mechanisms, including eBay-style auctions, bundles, Dutch auctions, and sales in any ERC20 token. OpenSea is currently the largest general marketplace for user-owned digital items, with the broadest set of categories (500 and growing), the most items (over 12 million), and over $15M in trading volume. The OpenSea team has backgrounds from Stanford, Palantir, Pinterest, and Google, and is funded by YCombinator, Founders Fund, Coinbase Ventures, 1Confirmation, and Blockchain Capital. www.OpenSea.io