Preheat oven to 350 degrees Fahrenheit (180 degrees Celsius).

Beat egg yolks until pale yellow. Add 1/2 cup sugar and continue to beat until mixture begins to thicken. Add oil, potato starch, salt, vanilla sugar, and baking powder and beat until well combined.

In a separate bowl with clean beaters, beat egg whites until soft peaks form. Gradually add one cup sugar and continue to beat until a stiff meringue forms. Stir a small amount of the mixture into the egg yolk mixture until combined, then fold in remaining beaten whites.

Spoon a third of the batter into an ungreased tube pan and sprinkle evenly with half the grated chocolate. Spoon another third of the batter carefully over the chocolate and repeat with the remaining chocolate and batter.

Bake for one hour or until top springs back when touched. Remove from oven and invert onto a soda or wine bottle to cool. 

While cake is cooling, prepare frosting: In a small bowl, combine frosting ingredients, mixing vigorously until well combined and smooth. (If frosting is too thick, add water bit by bit to achieve a thick, creamy frosting; if it becomes too watery, add a little more confectioners’ sugar until desired consistency is achieved.) Pour over cooled cake.