Why Tokenized Gold’s Explosive Growth Isn’t the Full Story: Xash CEO

Tokenized Gold Booms successful Volume

Despite surging concern and trading volumes, tokenized golden has struggled to found meaningful inferior in decentralized finance (DeFi), raising questions astir whether blockchain exertion is delivering advantages beyond accepted golden concern products.

The tokenized golden marketplace has expanded rapidly since precocious 2024, driven by increasing capitalist request and rising golden prices. However, Kevin Huynh, co-founder and CEO of Xash, argues that the sector’s maturation masks a cardinal weakness: astir tokenized golden remains mostly disconnected from the DeFi applications that proponents accidental separate blockchain-based assets from accepted concern products.

According to the World Gold Council’s 2026 Digital Gold Market Report, the tokenized golden marketplace has grown fivefold since precocious 2024, with tether gold (XAUT) and pax golden (PAXG) accounting for much than 90% of the market. Spot trading volumes reached $90 cardinal successful the archetypal 4th of 2026, reflecting increasing capitalist involvement successful blockchain-based representations of carnal gold.

Yet Huynh, speaking to Bitcoin.com News, cautioned against interpreting these metrics arsenic grounds that tokenized golden has achieved wide applicable adoption.

“Buying isn’t the aforesaid arsenic using,” Huynh said. “The amended measurement of adoption is what holders bash with their tokens.”

He pointed to estimates showing that lone astir $63 cardinal worthy of PAXG and XAUT is deployed arsenic collateral connected Aave and Morpho, 2 large DeFi lending platforms. That represents astir 1% of their combined marketplace capitalization of astir $4.9 billion, based connected the figures helium cited.

Although these estimates bash not relationship for each imaginable usage of tokenized gold, Huynh believes they exemplify the constricted penetration of gold-backed tokens into decentralized fiscal applications.

Rising Gold Prices Explain Only Part of Market Growth

Huynh acknowledged that tokenized gold’s enlargement reflects genuine capitalist request alternatively than simply the appreciation of the underlying precious metal. He cited PAXG’s circulating supply, which much than doubled from astir 198,000 tokens astatine the extremity of November 2024 to astir 448,000 now. Over the aforesaid period, golden prices roseate from astir $2,660 per ounce to $4,030, an summation of much than 50%.

According to Huynh, astir two-thirds of PAXG’s marketplace worth maturation implicit that play came from the issuance of further tokens, portion rising golden prices accounted for the remaining third. Nevertheless, helium argued that the favoritism betwixt buying tokenized gold and utilizing it remains important erstwhile assessing the sector’s semipermanent prospects.

“Tokenized golden saw $90 cardinal successful spot trading measurement successful the archetypal 4th of 2026, but that’s radical trading the golden price, which they tin already bash with an ETF,” Huynh said.

He argued that genuine adoption would necessitate tokenized golden to execute functions that carnal bullion and accepted concern products cannot easy replicate.

“Genuine adoption is erstwhile the token does thing a barroom successful a vault can’t: unafraid a loan, settee a payment, oregon beryllium earned done activity. That portion is inactive astatine an aboriginal stage.”

Blockchain Transparency Has Not Eliminated the Trust Problem

Beyond constricted utility, Huynh identified different structural obstacle facing tokenized gold: blockchain exertion cannot independently warrant the existence, ownership, oregon recoverability of the carnal assets backing integer tokens.

The World Gold Council’s probe recovered that astir 4 successful 5 investors privation to spot a integer golden supplier earlier committing funds, suggesting that accepted concerns astir custody and capitalist extortion stay cardinal to adoption.

“A blockchain proves what happened connected the ledger. It can’t beryllium what happened disconnected it,” Huynh said. “A golden token is simply a assertion connected a barroom sitting successful a vault. The concatenation can’t archer you that the barroom exists, that cipher other has a assertion connected it, oregon that a tribunal volition manus it to you if the issuer fails.”

He argued that portion blockchain transparency enables investors to verify token issuance and transfers, it cannot regenerate autarkic audits, security arrangements, oregon legally enforceable ownership rights.

For investors, the quality to redeem tokens for carnal golden remains peculiarly important. Huynh cited Paxos’ carnal redemption requirements, which helium said impact a minimum of 430 PAXG positive fees, placing nonstop carnal redemption beyond the scope of galore smaller investors.

In his view, the industry’s nonsubjective should truthful beryllium to minimize reliance connected idiosyncratic intermediaries alternatively than assertion that blockchain exertion tin destruct spot altogether.

“Blockchain’s occupation is to marque those safeguards cheaper and faster to check, not to regenerate them,” helium said.

Tokenized Gold Faces a Distribution and Utility Challenge

Huynh besides questioned whether tokenized gold’s imaginable outgo advantages are capable to pull mainstream investors distant from established concern products. He noted that PAXG does not complaint ongoing retention fees, while the SPDR Gold MiniShares Trust (GLDM), a low-cost U.S. golden exchange-traded money (ETF), charges an yearly disbursal ratio of 0.10%.

Despite that difference, Huynh cited astir $31 cardinal successful assets held by GLDM, substantially exceeding PAXG’s marketplace capitalization.

“Being cheaper isn’t enough,” helium said.

Instead, helium identified distribution, cost, and inferior arsenic the 3 factors apt to find whether tokenized golden captures a meaningful stock of the broader integer golden market, which the World Gold Council estimates could scope $160 cardinal to $170 cardinal by 2031.

That projection includes integer golden products beyond blockchain-based tokens.

Huynh pointed to the occurrence of integer golden services integrated into mainstream outgo platforms and banking applications, peculiarly successful Asian markets. He cited India’s Unified Payments Interface, wherever integer golden purchases reportedly reached 254 cardinal transactions successful March 2026, and Indonesia’s Pegadaian Tring application, which has attracted much than 6 cardinal users.

According to Huynh, these examples show the value of making golden concern accessible done platforms consumers already use. However, helium argued that tokenized golden has yet to execute comparable organisation done large banking and outgo applications successful Western markets.

More importantly, helium believes tokenized golden indispensable found uses that separate it from accepted golden concern products.

“A token that conscionable sits successful a wallet competes with ETFs connected terms alone,” Huynh said. “An ETF stock can’t beryllium spent oregon earned onchain, truthful that request is tokenized gold’s to win.”

Could Stablecoin Activity Unlock Tokenized Gold Demand?

One imaginable way toward greater utility, according to Huynh, is connecting tokenized golden rewards to the expanding usage of stablecoins crossed decentralized fiscal markets. Rather than requiring investors to acquisition golden tokens directly, Xash has unveiled a model that rewards users with golden for participating successful activities specified arsenic stablecoin lending, liquidity provision, and trading connected Solana-based DeFi platforms.

Huynh believes this attack could code 2 challenges simultaneously: the constricted applicable usage of tokenized golden and DeFi’s longstanding trouble retaining users aft fiscal incentives expire.

He pointed to earlier liquidity mining programs that attracted important superior done governance-token rewards but struggled to clasp participants erstwhile those incentives ended.

Although immoderate protocols subsequently shifted toward stablecoin-denominated rewards, Huynh argued that changing the reward plus does not needfully alteration the behaviour of participants seeking short-term returns.

“So the occupation is nary longer what the reward is worth, but who the reward attracts: currency incentives pull short-term output farmers,” helium said.

Xash’s attack is based connected the premise that users accumulating golden arsenic a semipermanent plus whitethorn beryllium much inclined to stay progressive than participants chiefly seeking impermanent inducement payments. However, whether gold-denominated rewards tin consistently amended retention remains to beryllium demonstrated.

Huynh nevertheless sees opportunities extending beyond DeFi lending and trading. He suggested that stablecoin outgo cards could yet connection golden rewards connected mundane purchases, creating request among consumers who whitethorn person small involvement successful straight trading cryptocurrencies oregon investing successful gold.

“New request for golden doesn’t beryllium connected anyone deciding they privation vulnerability to the golden price. It depends connected however overmuch radical privation to usage stablecoins,” helium said.

The broader accusation is that tokenized gold’s adjacent signifier of maturation whitethorn beryllium little connected the terms of bullion and much connected its integration into mundane fiscal activity.

For now, the sector’s accelerated enlargement demonstrates increasing request for integer vulnerability to gold. Whether it tin construe that request into wide blockchain inferior remains an unfastened question.