Tokenization of Gold: Reshaping the On-Chain Paradigm of Safe-Haven Assets

I. Introduction: The Return of Risk Aversion Demand in the New Cycle

Since the beginning of 2025, the global situation has been turbulent, economic growth has been weak, and the demand for safe-haven assets has risen again. The price of gold has broken through the $3000 per ounce mark, becoming the top choice for capital seeking safety. At the same time, as the integration of blockchain technology and traditional assets accelerates, tokenization of gold has become a new trend in financial innovation. It not only retains the value preservation property of gold but also possesses the liquidity, combinability, and smart contract interaction capabilities of on-chain assets. More and more investors and institutions are beginning to include tokenized gold in their asset allocation vision.

2. Gold: The "hard currency" that remains irreplaceable in the digital age

Despite the fact that humanity has entered a highly digitalized financial era, with various new types of financial assets continuously emerging, gold maintains its status as the "ultimate store of value asset" due to its unique historical depth, value stability, and cross-sovereign currency attributes. Gold is referred to as "hard currency" not only because of its natural scarcity and physical counterfeiting resistance, but also because it carries the long-term consensus of human society over thousands of years, rather than the credit endorsement of a specific country or organization. In any macroeconomic cycle where sovereign currencies may depreciate and fiat currency systems may collapse, gold is always regarded as the last line of defense.

In the past few decades, gold has been marginalized at times. However, it has been proven that fiat currency cannot completely escape the fate of cyclical crises, and the status of gold has not been erased; instead, it has been reassigned the role of a value anchor in every round of monetary crisis. Especially after 2023, multiple factors such as geopolitical friction, risks of U.S. debt default, and persistent global inflation have combined to bring gold back to the important threshold of $3000/ounce, triggering a shift in global asset allocation logic.

The behavior of central banks is the most intuitive reflection of this trend. Over the past five years, central banks around the world have continuously increased their gold holdings, especially emerging market countries, which have been the most active. In 2023, the net gold purchases by global central banks surpassed 1,100 tons, setting a new historical high. This round of gold repatriation essentially stems from deep-seated considerations such as strategic asset security, the diversification of sovereign currencies, and the declining stability of the dollar system. Against the backdrop of the ongoing restructuring of global trade patterns and geopolitical dynamics, gold is once again viewed as the reserve asset with the most trusted boundaries.

More structurally significant is the fact that gold's safe-haven value is being re-recognized by global capital markets. Compared to credit assets such as U.S. Treasury bonds, gold does not rely on the issuer's ability to pay, and there is no risk of default or restructuring. Therefore, against the backdrop of high global debt and expanding fiscal deficits, gold's "no counterparty risk" attribute is particularly prominent. Currently, the debt/GDP ratio of major economies worldwide generally exceeds 100%, and fiscal sustainability is increasingly questioned, making gold irreplaceably attractive in an era of weakened sovereign credit.

Of course, gold is not a perfect financial asset; its trading efficiency is relatively low, physical transfer is difficult, and it is hard to be programmed, which makes it seem "heavy" in the digital age. However, this does not mean it is being eliminated; rather, it prompts gold to undergo a new round of digital upgrade. The evolution of gold in the digital world is not a static preservation of value, but rather an active integration of financial technology logic towards "tokenized gold". This transformation is no longer a competition between gold and digital currencies, but a combination of "value anchoring assets and programmable financial protocols".

It is worth noting that gold, as a store of value, has a complementary rather than an absolute substitute relationship with Bitcoin, the "digital gold". Bitcoin's volatility is much higher than that of gold, lacking sufficient short-term price stability, and in an environment of high macro policy uncertainty, it is more likely to be viewed as a risk asset rather than a safe-haven asset. Gold, with its vast spot market, mature financial derivatives system, and broad acceptance at the central bank level, still maintains the triple advantages of being counter-cyclical, low volatility, and high recognition.

Overall, whether from the perspective of macro financial security, the reshaping of the currency system, or the reconstruction of global capital allocation, gold's status as hard currency has not weakened; rather, it has been further enhanced by the strengthening of global trends such as "de-dollarization", geopolitical fragmentation, and sovereign credit crises. In the digital age, gold is both the stabilizing force of the traditional financial world and a potential value anchor for 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" through tokenization and programmability in the new and old financial systems.

3. Tokenization of Gold: On-chain Representation of Assets

Tokenization of gold is essentially a technology and financial practice that maps gold assets as encrypted assets on a blockchain network. It reflects the ownership or value of physical gold as on-chain tokens through smart contracts, allowing gold to no longer be limited to static records in vaults, warehouse receipts, and banking systems, but to circulate and combine freely on-chain in a standardized and programmable form. Tokenized gold is not the creation of a new type of financial asset, but rather a reconstruction method that injects traditional bulk commodities 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 blockchain, giving rise to a completely new value-bearing structure.

This innovation can be understood as an important part of the global asset digitization wave on a macro level. The widespread adoption of smart contract platforms provides a programmable foundation for the on-chain representation of gold; meanwhile, the development of stablecoins in recent years has validated the market demand and technical feasibility of "on-chain value-backed assets." Tokenization of gold, in a sense, is an extension and elevation of the stablecoin concept, which not only pursues price anchoring but also is supported by real, credit default risk-free hard assets. Unlike stablecoins pegged to fiat currencies, gold-backed tokens naturally escape the volatility and regulatory risks of a single sovereign currency, possessing cross-border neutrality and long-term anti-inflation capabilities.

From a micro-mechanism perspective, the generation of tokenized gold usually relies on two paths: one is the "100% physical collateral + on-chain issuance" custody model, and the other is the "programmable mapping + verifiable asset certificates" protocol model. Regardless of the path taken, the core goal is to build a mechanism for a trustworthy representation, liquidity, and settlement of gold on-chain, thereby achieving real-time transferability, divisibility, and combinability of gold assets, breaking the traditional problems of fragmentation, high thresholds, and low liquidity in the gold market.

The greatest value of tokenized gold lies not just in the advancement of technological expression, but in its fundamental transformation of the functionality of the gold market. In the traditional gold market, trading physical gold is usually accompanied by high transportation, insurance, and storage costs, while paper gold and ETFs lack true ownership and on-chain composability. Tokenized gold attempts to provide a new form of gold that is divisible, can be settled in real-time, and can flow across borders through on-chain native assets, transforming gold from a "static asset" into a dynamic financial instrument with "high liquidity + high transparency." This characteristic greatly expands the available scenarios for gold in DeFi and the global financial market, allowing it to not only serve as a store of value but also to participate in multi-layered financial activities such as collateral lending, leveraged trading, yield farming, and even cross-border clearing and settlement.

Furthermore, tokenization of gold is driving the transition of the gold market from centralized infrastructure to decentralized infrastructure. In the past, the circulation of gold's value heavily relied on traditional centralized nodes, leading to issues such as information asymmetry, cross-border delays, and high costs. Tokenized gold, using on-chain smart contracts as its carrier, has constructed a permissionless and trustless intermediary-free system for the issuance and circulation of gold assets, making the processes of title confirmation, settlement, and custody of traditional gold transparent and efficient. This significantly lowers the market access threshold, allowing retail users and developers to equally access the global gold liquidity network.

Overall, tokenized gold represents a profound value reconstruction and system integration of traditional physical assets in the blockchain world. It not only inherits the hedging properties and store of value functions of gold but also expands the functional boundaries of gold as a digital asset in the new financial system. In the context of the global trend of financial digitalization and the multipolarization of the monetary system, the reconstruction of gold on-chain is destined to be not a temporary attempt but a long-term process that accompanies the evolution of financial sovereignty and technological paradigms. Whoever can build a tokenized gold standard that combines compliance, liquidity, composability, and cross-border capabilities in this process may have the potential to master the discourse power of the future "on-chain hard currency."

4. Analysis and Comparison of Mainstream Tokenization Gold Projects

In the current cryptocurrency financial ecosystem, tokenized gold has emerged as a bridge connecting the traditional precious metals market with the new on-chain asset system, giving birth to a number of representative projects. These projects explore multiple dimensions such as technical architecture, custody mechanisms, compliance pathways, and user experience, gradually constructing a market prototype for "on-chain gold." Although they all adhere to the basic principle of "physical gold collateral + on-chain mapping" in their core logic, the specific implementation paths and focal points differ, reflecting that the tokenized gold sector is still in a stage of competition and undefined standards.

The most representative tokenized gold projects currently include: Tether Gold ( XAUT ), PAX Gold ( PAXG ), Cache Gold ( CGT ), Perth Mint Gold Token ( PMGT ), and Aurus Gold ( AWG ), among others. Tether Gold and PAX Gold can be regarded as the dual leaders in the current industry, not only leading other projects in market capitalization and liquidity but also holding an advantageous position in user trust and exchange support due to their mature custody systems, high transparency, and strong brand endorsement.

Tether Gold(XAUT) is launched by the leading stablecoin provider Tether, with its main feature being the one-to-one peg with standard gold bars in the London gold market, where each XAUT corresponds to 1 ounce of physical gold held in Switzerland. This project relies on the ecosystem behind Tether, providing a first-mover advantage in terms of liquidity, trading channels, and stability. However, Tether Gold is relatively conservative in terms of disclosure and transparency, and users cannot directly view the binding information of each token to specific bar numbers on-chain, which raises controversy in the crypto community that demands high decentralization. Additionally, XAUT's compliance layout mainly targets international offshore users, making the entry threshold still quite high for investors wishing to invest in tokenized gold through formal financial channels.

In comparison, PAX Gold( PAXG) is launched by the U.S.-licensed fintech company Paxos, going further in compliance and asset transparency. Each PAXG similarly represents 1 ounce of London standard gold and provides users with on-chain queryable asset correspondence information through verifiable gold bar serial numbers and custody data. More importantly, Paxos, as a trust company regulated under the New York Department of Financial Services( NYDFS), has its gold asset custody and issuance mechanisms subject to regulatory scrutiny, which enhances PAXG's compliance endorsement to some extent. The project is also actively expanding its DeFi compatibility and has currently been integrated into multiple DeFi protocols, allowing PAXG to be used as collateral for lending and liquidity mining, thereby unlocking the compound value of gold assets on-chain.

Cache Gold(CGT) represents another attempt at tokenized gold that leans more towards decentralized and verifiable asset credentials. The project adopts a "Token Wrapper + Gold Bar Number Registration" system, where each CGT represents 1 gram of physical gold and is bound to a batch number of gold stored in an independent custody warehouse. Its most prominent feature is the strong binding mechanism between on-chain and off-chain, meaning that every gold collateral must generate a corresponding Proof of Reserve, which is recorded on the blockchain along with batch information and liquidity status. This mechanism allows users to more transparently track the physical assets behind the tokens, but at the same time also makes the project...