1. Introduction: The return of safe-haven demand in the new cycle
Since the beginning of 2025, geopolitical conflicts have occurred frequently, inflationary pressure has not been eliminated, and major economies have grown weakly, and the demand for safe-haven assets has heated up again. Gold, as a traditional safe asset, has once again become the focus, and the price of gold has repeatedly hit new highs, breaking through the $3,000 per ounce mark, becoming a safe haven for global funds to rush in. At the same time, with the accelerated progress of the integration of blockchain technology and traditional assets, Tokenized Gold has become a new outlet for financial innovation. It not only retains the value-preserving properties of gold, but also has the liquidity, composability and smart contract interaction capabilities of on-chain assets. More and more investors, institutions and even sovereign funds are beginning to include tokenized gold in their allocation vision.
2. Gold: An irreplaceable hard currency in the digital age
Although mankind has entered a highly digitalized financial era, various financial assets continue to emerge, from credit currencies, government bonds, stocks, to the digital currencies that have emerged in recent years, gold has always maintained its status as the ultimate store of value asset with its unique historical thickness, value stability, and cross-sovereign currency attributes. The reason why gold is called hard currency is not only because it has natural scarcity and physical unforgeability, but also because it carries the credit endorsement of not a specific country or organization, but the result of thousands of years of long-term consensus in human society. In any macro cycle where sovereign currencies may depreciate, the legal currency system may collapse, and global credit risks accumulate, gold is always regarded as the last line of defense and the ultimate means of payment under systemic risks.
In the past few decades, especially after the collapse of the Bretton Woods system, gold was once marginalized, and its status as a direct settlement tool was replaced by the US dollar and other sovereign currencies. However, it has been proved that credit currency cannot completely escape the fate of cyclical crises. The status of gold has not been erased, but has been re-endowed with the role of value anchoring in each round of currency crisis. The global financial crisis in 2008, the global monetary easing trend after the epidemic in 2020, and the high inflation and interest rate hikes since 2022 have all led to a significant upward trend in gold prices. Especially after 2023, the superposition of multiple factors such as geopolitical friction, the risk of US debt default, and the stubborn global inflation has allowed gold to re-stand on the important mark of US$3,000 per ounce and trigger a new round of global asset allocation logic shift.
The behavior of the central bank is the most intuitive reflection of this trend. Data from the World Gold Council shows that global central banks have continued to increase their gold holdings over the past five years, especially non-Western countries such as China, Russia, India, and Turkey. In 2023, the global central banks net gold purchases exceeded 1,100 tons, setting a record high. This round of gold repatriation is not essentially a short-term tactical operation, but is based on deep considerations of strategic asset security, sovereign currency multipolarization, and the declining stability of the US dollar system. Against the backdrop of the continued reconstruction of the global trade pattern and geopolitics, gold is once again regarded as the reserve asset with the most trust boundaries. From the perspective of monetary sovereignty, gold is replacing U.S. Treasury bonds and becoming an important anchor for central banks in many countries to adjust their foreign exchange reserve structures.
More structurally significant is that the safe-haven value of gold is regaining recognition in the global capital market. Compared with credit assets such as US Treasury bonds, gold does not rely on the solvency of the issuer and does not have the risk of default or restructuring. Therefore, in the context of high global debt and continued expansion of fiscal deficits, the no counterparty risk attribute of gold is particularly prominent. At present, the debt/GDP ratio of major economies in the world generally exceeds 100%, and the United States is as high as more than 120%. Fiscal sustainability is increasingly questioned, making gold irreplaceable in an era of weakening sovereign credit. In actual operations, large institutions including sovereign wealth funds, pension funds, commercial banks, etc. have increased the proportion of gold allocation to hedge against global economic systemic risks. This behavior is changing the traditional counter-cyclical + defensive role of gold, making it more structurally neutral assets in the long run.
Of course, gold is not a perfect financial asset. Its natural defects such as relatively low transaction efficiency, difficulty in physical transfer, and difficulty in programming make it seem heavy in the digital age. But this does not mean that it is eliminated, but rather prompts gold to undergo a new round of digital upgrades. We have observed that the evolution of gold in the digital world is not a static preservation of value, but an active integration of financial technology logic in the direction of tokenized gold. This transformation is no longer a competition between gold and digital currency, but a combination of value-anchored assets and programmable financial protocols. The on-chain nature of gold injects liquidity, composability, and cross-border transfer capabilities into it, making gold not only a wealth carrier in the physical world, but also an anchor for stable assets in the digital financial system.
It is particularly noteworthy that gold, as a store of value asset, and Bitcoin, the digital gold, are complementary rather than absolutely substitutable in terms of positioning. Bitcoins volatility is much higher than that of gold, and it does not have sufficient short-term price stability. In an environment with high macroeconomic policy uncertainty, it is more likely to be regarded as a risky asset rather than a safe-haven asset. Gold, with its huge spot market, mature financial derivatives system, and wide acceptance at the central bank level, still maintains the triple advantages of anti-cyclicality, low volatility, and high recognition. From the perspective of asset allocation, gold is still one of the most important risk hedging factors in building a global investment portfolio, and has an irreplaceable underlying financial neutrality status.
In general, whether from the perspective of macro-financial security, monetary system reshaping, or global capital allocation reconstruction, the status of gold as a hard currency has not been weakened with the rise of digital assets. Instead, it has been enhanced again due to the strengthening of global trends such as de-dollarization, geopolitical fragmentation, and sovereign credit crisis. In the digital age, gold is not only the stabilizer of the traditional financial world, but also the potential value anchor of future on-chain financial infrastructure. The future of gold is not to be replaced, but to continue its historical mission as the ultimate credit asset in the old and new financial systems through tokenization and programmability.
Tokenized Gold: Gold Expression of On-chain Assets
Tokenized gold is essentially a technology and financial practice that maps gold assets in the form of encrypted assets in the blockchain network. It maps the ownership or value of physical gold into tokens on the chain through smart contracts, so that gold is no longer limited to static records of vaults, warehouse receipts and banking systems, but can be freely circulated and combined on the chain in a standardized and programmable form. Tokenized gold is not the creation of a new type of financial asset, but a way to reconstruct traditional commodities by injecting them into the new financial system in digital form. It embeds gold, a hard currency that spans historical cycles, into the decentralized financial operating system represented by the blockchain, giving birth to a new value-bearing structure.
This innovation can be understood as an important part of the global asset digitization wave at a macro level. The widespread popularity of smart contract platforms such as Ethereum provides an underlying programmable foundation for the on-chain expression of gold; and the development of stablecoins in recent years has verified the market demand and technical feasibility of on-chain value-anchored assets. In a sense, tokenized gold is an extension and upgrade of the concept of stablecoins. It not only pursues price anchoring, but also has real hard asset support without credit default risk. Unlike fiat-anchored stablecoins, gold-anchored tokens are naturally free from the volatility and regulatory risks of a single sovereign currency, and have cross-border neutrality and long-term anti-inflation capabilities. This is particularly important in the context of the current stablecoin landscape dominated by the US dollar, which is increasingly causing regulatory and geopolitical sensitivity issues.
From the perspective of micro-mechanism, the generation of tokenized gold usually relies on two paths: one is the custody model of 100% physical collateral + on-chain issuance, and the other is the protocol model of programmed mapping + verifiable asset certificates. The former, such as Tether Gold (XAUT) and PAX Gold (PAXG), have physical gold custodians behind them to ensure that each token corresponds to a certain amount of physical gold, and conducts regular audits and off-chain reports. The latter, such as Cache Gold, Digital Gold Token and other projects, try to bind programmable asset certificates to gold batch numbers to enhance the verifiability and liquidity of tokens. Regardless of the path adopted, the core goal is to build a mechanism for the reliable representation, flow and settlement of gold on the chain, so as to achieve real-time transferability, subdivision and combination of gold assets, breaking the stubborn problems of fragmentation, high threshold and low liquidity of the traditional gold market.
The greatest value of tokenized gold is not only the advancement of technical expression, but also its fundamental transformation of the functionality of the gold market. In the traditional gold market, the transaction of physical gold is usually accompanied by high transportation, insurance and storage costs, while paper gold and ETF lack real ownership and on-chain composability. Tokenized gold attempts to provide a new form of gold that is divisible, real-time settleable, and cross-border mobile through the form of native assets on the chain, so that gold, a static asset, is transformed into a dynamic financial instrument with high liquidity + high transparency. This feature greatly broadens the available scenarios of gold in DeFi and the global financial market, allowing it to exist not only as a value reserve, but also to participate in multi-level financial activities such as mortgage lending, leveraged trading, yield farming, and even cross-border clearing and settlement.
Furthermore, tokenized gold is driving the gold market to shift from centralized infrastructure to decentralized infrastructure. In the past, the value transfer of gold was heavily dependent on traditional centralized nodes such as the London Bullion Market Association (LBMA), clearing banks, and vault custodians, and problems such as information asymmetry, cross-border delays, and high costs emerged one after another. Tokenized gold uses on-chain smart contracts as a carrier to build a gold asset issuance and circulation system that does not require permission or trust in intermediaries, making the traditional gold confirmation, settlement, custody and other links transparent and efficient, greatly reducing the market entry threshold, and allowing retail users and developers to equally access the global gold liquidity network.
In general, tokenized gold represents a profound reconstruction of the value and system integration of traditional physical assets in the blockchain world. It not only inherits the safe-haven attributes and value storage functions of gold, but also expands the functional boundaries of gold as a digital asset in the new financial system. Under the general trend of global financial digitization and multipolarization of the monetary system, the reconstruction of gold on the chain is destined not to be a temporary attempt, but a long-term process accompanied by the evolution of financial sovereignty and technological paradigms. And whoever can build a tokenized gold standard with compliance, liquidity, composability and cross-border capabilities in this process will have the opportunity to master the discourse power of the future hard currency on the chain.
4. Analysis and comparison of mainstream tokenized gold projects
In the current crypto-financial ecosystem, tokenized gold, as a bridge between the traditional precious metals market and the emerging on-chain asset system, has already produced a number of representative projects. These projects have explored multiple dimensions, including technical architecture, custody mechanism, compliance path, and user experience, and gradually built a set of on-chain gold market prototypes. Although they all follow the basic principle of physical gold mortgage + on-chain mapping in their core logic, their specific implementation paths and focuses are different, reflecting that the tokenized gold track is still in a stage of competition and undetermined standards.
The most representative tokenized gold projects include: Tether Gold (XAUT), PAX Gold (PAXG), Cache Gold (CGT), Perth Mint Gold Token (PMGT) and Aurus Gold (AWG), etc. Among them, Tether Gold and PAX Gold can be regarded as the two leaders in the current industry. They are not only ahead of other projects in market value and liquidity, but also have a dominant position in user trust and exchange support with mature custody systems, high transparency and strong brand endorsement.
Tether Gold (XAUT) was launched by Tether, the leading stablecoin. Its biggest feature is that it is anchored one-to-one with the standard gold bars in the London gold market. Each XAUT corresponds to 1 ounce of physical gold hosted in Switzerland. Relying on the Bitfinex ecosystem behind Tether, the project has first-mover advantages in liquidity, trading channels and stability. However, Tether Gold is relatively conservative in disclosure and transparency. Users cannot directly view the binding information of each token with the specific gold bar number on the chain. This black-box asset custody method is controversial in the crypto community with high requirements for decentralization. In addition, XAUTs compliance layout is still mainly for international offshore users. For investors who want to invest in tokenized gold through formal financial channels, the entry threshold is still high.
In comparison, PAX Gold (PAXG), launched by Paxos, a licensed fintech company in the United States, goes further in compliance and asset transparency. Each PAXG also represents 1 ounce of London standard gold, and provides users with queryable asset correspondence information on the chain through verifiable gold bar serial numbers and custody data. More importantly, as a trust company under the supervision of the New York Department of Financial Services (NYDFS), Paxoss gold asset custody and issuance mechanism is subject to regulatory review, which has improved PAXGs compliance endorsement to a certain extent. The project is also actively expanding DeFi compatibility, and has been integrated in multiple DeFi protocols such as Aave and Uniswap, allowing PAXG to participate in lending and liquidity mining as collateral, thereby releasing the compound value of gold assets on the chain.
Cache Gold (CGT) represents another attempt to tokenize gold towards a more decentralized and verifiable asset certificate. The project adopts the Token Wrapper + Gold Bar Number Registration system. Each CGT represents 1 gram of physical gold and is bound to the gold batch number of an independent custody warehouse. Its biggest feature is the strong binding mechanism between the chain and the off-chain, that is, each gold mortgage must generate a corresponding Proof of Reserve, and the batch information and flow status must be recorded through the blockchain. This mechanism allows users to track the physical assets behind the tokens more transparently, but it also makes the project face challenges in custody efficiency and liquidity organization, and has not yet been widely promoted to mainstream DeFi scenarios.
Perth Mint Gold Token (PMGT) is an official tokenized gold product launched by Perth Mint, Australias state-owned precious metal minting institution. The gold assets behind this project are guaranteed by the Australian government and held in a national treasury. In theory, it is one of the most credible projects in tokenized gold. However, due to its low participation in the cryptocurrency market, scarce trading pairs, and lack of DeFi compatibility, the project, although highly secure and officially endorsed, lags far behind Tether Gold and PAX Gold in terms of market liquidity and user popularity.
There are also some innovative projects such as Aurus Gold (AWG) and Meld Gold, which try to build a new paradigm for tokenized gold through diversified custodians, NFT packaging, cross-chain issuance, etc. For example, Aurus Gold adopts a model of joint issuance by multiple mints and integration with multiple exchanges and wallets to enhance the ability of gold tokens to resist centralized dependence, and introduces NFT as gold-wrapped vouchers to provide flexibility for asset management. Such projects are closer to the Web3 native asset system in concept, but are still in the early stages and have not yet established a broad market consensus.
Overall, the current tokenized gold market presents a polarized pattern: on the one hand, centralized + high-trust projects represented by Tether Gold and PAX Gold have quickly occupied the mainstream market share with the endorsement of large institutions, mature custody structure and exchange access advantages; on the other hand, decentralized + verifiable projects represented by Cache Gold, Aurus Gold, etc. emphasize asset transparency and on-chain autonomy, but in actual use, they are still limited by market acceptance, custody coordination efficiency and DeFi integration. The competition between the two also reflects the continuous game between the trust threshold and technical ideal of the entire crypto-financial ecosystem.
Judging from the evolution trend of the industry, the future tokenized gold standard is likely to evolve in the direction of compliance, verifiability, composability, and cross-chain capabilities. On the one hand, only by establishing a transparent custody system in a strong regulatory environment and assets that have passed audits and on-chain verification can we gain the long-term trust of mainstream institutions and users; on the other hand, the project must also truly integrate into the DeFi and Web3 infrastructure to achieve the asset primitives of gold tokens, otherwise it is just a gold deposit certificate under financial packaging and it is difficult to release sufficient use value and network effects.
5. Tokenized gold from the perspective of investors: value, opportunities and risks
As an emerging financial instrument that combines the characteristics of traditional value anchoring and on-chain assets, tokenized gold is gradually becoming an alternative asset option in investors portfolio allocation. Unlike traditional gold ETFs or physical gold bars, its core value lies not only in the safe-haven attribute represented by gold itself, but also in the enhanced liquidity, improved transaction convenience and expanded composability obtained after the digitalization of assets through blockchain infrastructure. From the perspective of investors, the appeal of tokenized gold lies in its finding a relatively balanced entry point between the financial stability anchor and the technological innovation dividend, becoming a realistic path to configure on-chain hard currency in the context of high volatility in the crypto market.
First of all, tokenized gold naturally inherits the basic investment logic of gold as a global safe-haven asset. Historical experience shows that in cycles of increased macroeconomic uncertainty, increased inflationary pressure, or rising geopolitical risks, gold usually obtains risk premiums in the capital market and becomes the preferred target for institutional and individual investors to hedge against the decline in the purchasing power of fiat currencies and violent market fluctuations. Tokenized gold continues this attribute, especially during periods of violent fluctuations in the crypto market, providing investors with asset allocation opportunities with low or even negative correlation. In multiple crypto market down cycles in 2022 and 2023, the price fluctuations of tokens such as PAXG and XAUT were significantly smaller than those of mainstream crypto assets, and even became a chain capital safe haven for short-term risk aversion.
Secondly, tokenized gold gives gold assets unprecedented liquidity and accessibility. Traditional gold investment has multiple pain points, including high transaction thresholds, limited transaction time, inconvenient access, strong geographical restrictions, etc. Tokenized gold, as an ERC-20 or cross-chain asset, can not only be transferred instantly in any wallet that supports the public chain in the world, but also realize a variety of advanced financial operations such as high-frequency trading, DeFi staking, and cross-border settlement. This liquidity transition has greatly increased the operating space of gold assets, making it no longer limited to the asset warehousing function, but becoming a chain cash flow basic asset that can be dynamically managed.
More importantly, as DeFi and Web3 infrastructure mature, tokenized gold is gaining composable financial attributes, which makes it no longer just gold in digital form, but gradually becomes a component module of native assets on the chain. Investors can obtain stablecoins by pledging PAXG, thereby releasing liquidity to participate in other investment opportunities; they can also add gold assets to the liquidity pool to gain returns; they can even transfer tokenized gold across chains in multi-chain interoperability protocols to serve global payment and settlement needs. This concept of asset as protocol is an innovative path that cannot be achieved in the traditional gold financial system.
However, despite the many advantages of tokenized gold, it still has certain structural risks and development bottlenecks, and investors need to fully weigh them when participating. The first is the custody and redemption risk. The vast majority of tokenized gold projects still rely on a centralized physical custody system. Investors must trust that the issuer can properly keep the gold for a long time and provide physical redemption when necessary. However, the redemption process of most current projects is cumbersome, with high thresholds and geographical restrictions. Especially in extreme market conditions, whether users can successfully complete the exchange from on-chain assets to physical gold still faces legal and operational uncertainties. In addition, some projects do not disclose enough information on custody audits and asset certification. This lack of transparency will reduce user confidence and is not conducive to the long-term construction of its function as an on-chain safe-haven anchor.
The second is the external risk of compliance and regulation. Since gold itself is a high-value sensitive asset, its tokenization process involves multiple regulatory requirements such as the precious metals market, securities laws, KYC/AML, etc. In different jurisdictions, the legality and regulatory path of tokenized gold are not uniform, which means that the legal risks faced by the project are highly uncertain. Especially for institutional users who want to use such assets for cross-border settlement or large-value transactions, how to operate robustly within the compliance framework is a key factor in determining their acceptance.
Finally, from the perspective of market competition, the position of tokenized gold in the actual investment portfolio is still in the role of auxiliary configuration, and it is difficult to become a dominant asset. Although its risk aversion and stability characteristics have important value in the down cycle, in a bull market environment, its return performance is often inferior to risky crypto assets such as Bitcoin and Ethereum. This feature of stable value but limited increase makes tokenized gold more suitable as a tool to hedge volatility and stabilize portfolio returns, rather than a core investment target pursuing high growth.
In general, tokenized gold is not only a value storage tool for investors, but also a security-first configuration option in the digital economy. Its internal logic is based on the stable value of gold for thousands of years, and reshapes its trading, custody and combination capabilities through blockchain technology. With the further development of the DeFi ecosystem, the improvement of cross-chain infrastructure, and the gradual clarification of compliance paths, tokenized gold may play a more important role in the full life cycle management of digital assets. For individual users, this is a realistic path to enhance the risk resistance of assets and conduct counter-cyclical configuration; for institutions, it may become the bottom-line asset in building an on-chain portfolio, thus opening a new era of on-chain asset management in the true sense.
6. Conclusion: Gold’s on-chain upgrade is not a replacement, but a continuation
In an era of unstable credit, increased volatility of the US dollar, and reshaping of the global monetary landscape, gold is undergoing a round of digital rediscovery. It is not replaced by digital assets such as Bitcoin, but is tokenized, programmable, and smart contracted, so as to participate in the construction of the new financial system in a more flexible form. For users, this evolved gold is still hard currency, just in a different on-chain form. It can still provide a sense of security, value preservation, and risk resistance, becoming a true stable anchor in the digital world.
