TL;DR
- Market Growth: Tokenized commodities surpassed $6 billion, led by strong demand for gold-backed tokens and dominated by Ethereum’s $5.933 billion footprint.
- Issuer Leadership: Tether and Paxos control most of the market, with Tether Gold at $3.57 billion and Pax Gold at $2.31 billion, supported by rising gold prices above $5,000 per ounce.
- Risk and Custody: Rapid expansion brings renewed scrutiny over physical backing and redemption, with experts warning that key risks remain off-chain even as issuers like Paxos and Tether claim full, allocated gold support.
On-chain data indicates that tokenized commodities have crossed the $6 billion threshold this week, propelled by accelerating demand for gold-backed assets. The sector’s market cap now stands at $6.126 billion, reflecting a growing investor shift toward blockchain-based representations of physical commodities. Although still a small slice of the broader tokenized asset landscape, the rapid expansion highlights rising confidence in digital claims to tangible stores of value.
https://twitter.com/tokenterminal/status/2021377126595957143
Tokenized Commodities Gain Ground Across Blockchains
Tokenized commodities represent roughly 1.87% of the $328.156 billion tokenized asset market as of February 9. Ethereum dominates the sector with $5.933 billion in tokenized commodities, far outpacing Arbitrum One at $98.112 million. The BNB Chain and Plasma network follow with $26.87 million and $21.45 million, respectively. The distribution underscores Ethereum’s continued role as the primary settlement layer for institutional-grade tokenized assets.
Tether remains the largest issuer in the category, holding $3.57 billion in tokenized commodities through its Tether Gold tokens. Paxos follows with $2.31 billion, driven by rising interest in Pax Gold. Pleasing Gold on Arbitrum One accounts for $97.82 million, while Matrixdock Gold contributes roughly $37 million on Ethereum and $26.87 million on the BNB Chain. The surge coincides with gold testing new highs above $5,000, with prices currently near $5,114 per ounce.
Institutional Inflows Accelerate Market Expansion
The tokenized commodities market has grown more than 4x since late 2024, fueled by institutional participation. Paxos reported record January inflows, adding approximately 1.68 metric tons of gold and lifting its total holdings in London to more than 13 metric tons. Investors appear to be seeking stability amid macroeconomic uncertainty and declining crypto prices, turning to on-chain gold for exposure with near-instant settlement.
Despite rapid growth, concerns persist regarding whether gold tokens are fully backed, independently audited, and redeemable. Past commodity-related bankruptcies, including MF Global’s 2011 collapse, have heightened scrutiny. Michael Ashley Schulman of Running Point Capital Advisors noted that most risks remain off-chain, tied to custodial and legal structures. Paxos asserts its tokens are 100% backed by allocated gold in London vaults, while Tether states its tokens represent ownership of physical gold.
