Tokenized gold allows buyers to hold representations of real gold on-chain, and the leading tokens are PAXG from Paxos and XAUt from Tether, both of which are backed 1:1 by physical gold and can be redeemed for the underlying asset. These tokens can provide an RWA alternative to stablecoins, and there are also some opportunities to utilize them for DeFi returns, including on Hyperbeat, Fluid, and Curve.
The markets are looking bullish again right now, but there will always be times when you want to check out of the volatility and sit for a while in more stable, real-world assets, and in that case, tokenized gold presents an interesting alternative to fiat-pegged stablecoins.
What’s more, there are also now opportunities to earn yield on this kind of token, so in this guide we’ll look at what on-chain options exist for the goldbugs out there, and at how you can put them to work on some DeFi protocols.
What Is Tokenized Gold?
These digital assets act as on-chain versions of gold, so their price is pegged to the price of gold as they represent the physical commodity. This makes them a very convenient option if you want to hold gold as an investment asset but without having to ever go off-chain, or they can be used as an alternative to stablecoins at times when gold looks like a better option than the dollar for preserving value.
The total market cap of the tokenized gold category is currently a little under $2 billion, and the top tokens include:
Pax Gold (PAXG). This is issued by Paxos on Ethereum, it’s currently the number one gold token by market cap, and token holders own the underlying gold, which is held in vaults in London. This means tokens are fully redeemable for gold (1 token = 1 ounce), although this probably isn’t a mechanism most holders will ever use.
Tether Gold (XAUt). Very similar to PAXG but issued by Tether, XAUt is very close behind in terms of market cap, it’s an ERC-20 token on Ethereum, and again, one token represents redeemable ownership of one ounce of physical gold, which this time is held in Swiss vaults.
XAUt0. This is an omnichain version of XAUt that was launched earlier this month by cross-chain liquidity protocol USDT0, and it’s designed to expand across multiple chains. Currently, XAUT0 can move between Ethereum, TON, and HyperEVM.
How Can I Earn Yield From Gold Tokens?
Although there is growing interest in RWAs more generally, there are limited options when it comes to protocols where you can pick up returns from gold tokens, but it’s an area ready for expansion because it has a lot of potential.
For now though, let’s take a look at the strategies on offer, but as always, be aware of the risks when using DeFi, which can include smart contract vulnerabilities, frontend attacks, and high volatility.
Hyperbeat
By far the most user-friendly platform with a gold option is over on the HyperEVM chain, which is part of the Hyperliquid ecosystem.
Here you can find a protocol called Hyperbeat (which was also covered as part of a previous Hyperliquid guide), and this allows users to make use of XAUt. To do that, you’ll need to visit the protocol, connect your wallet on the HyperEVM network, and make your way to the Hyperbeat XAUt Vault where you can make a deposit.
Note that the APY here is low–just 1%–but you will be gaining Hyperbeat…
