Tokenized gold has been around a while. The concept is simple: you buy a crypto token backed one-to-one by physical gold, and now you own the crypto version of gold. The two largest tokenized gold cryptocurrencies are Tether’s XAUT and Paxos’s PAXG, with market caps of about $2.6 billion and $2 billion, respectively. Combined they have a market cap of roughly $4.6 billion.
Theo, Libeara, and Falcon Finance are pursuing yield-bearing tokenized gold. Theo recently launched thGOLD, a token representing a slice of the MG999 On-Chain Gold Fund, with an expected annual yield of 2.3% after fees. The token trades on DeFi venues such as Hyperliquid, Uniswap, Morpho, and Pendle. Libeara’s first borrower, Mustafa Jewellery of Singapore, transacts about two tons of gold annually and has revenues around $550 million.
Falcon Finance offers a crypto-based solution to the idle gold problem. It provides a vault into which customers place their XAUT as collateral, then hedges the collateral by taking long and short positions on a DeFi exchange to keep the position’s value stable regardless of Bitcoin price movements. This position can be offered as loan liquidity on the platform to borrowers willing to pay a yield in interest. Falcon CEO Andrei Grachev told Fortune that traders can expect a 4% yield after various fees, and the firm hopes to grow to $500 billion in assets under management within a few months.
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