Author: Frank, PANews
As Bitcoin faces a "value winter", real-world gold is being recast on the blockchain.
Recently, the volatility of the crypto market has become increasingly uncertain with changes in international financial markets, and the price trends of Bitcoin, Ethereum, SOL, and other mainstream crypto assets have fallen into a downturn. The market's enthusiasm for crypto trading seems to be shifting from optimism to bearish sentiment. In stark contrast, international gold prices have continued to rise, breaking through $3,240 per ounce and constantly setting new historical highs, once again verifying gold's nature as a safe-haven asset.
In the crypto market, the market value of gold-linked assets has also been rising, with tokenized gold assets surpassing $2 billion on April 11th. From a risk hedging perspective, gold-related crypto assets seem to be becoming a new high-quality option. PANews will review the current mainstream gold-related trading exposures in the crypto market.
Gold-related trading exposures in the crypto market currently include tokenized gold, such as TetherGold (XAUT) or PAXGold (PAXG), which are essentially digital certificates of physical gold ownership. There are also derivative trades using these tokenized gold assets with stablecoins. For example, spot trading pairs or contract trading pairs for XAUT or PAXG offered by exchanges. Additionally, some online precious metal traders support cryptocurrency as a payment method when trading physical gold. These gold participation methods vary in risk appetite and fund flexibility.
XAUT and PAXG: Leading Tokenized Gold Projects
TetherGold (XAUT) and PAXGold (PAXG) are currently the two largest market cap varieties in the tokenized gold market. XAUT is issued by Tether, the USDT issuer, with 1 XAUT corresponding to the ownership of 1 troy ounce of "good delivery" gold bars recognized by LBMA (London Bullion Market Association). The gold is specifically allocated, and holders can check the unique serial number, purity, and weight of the gold bars associated with their address through the official website. Tether claims that its reserves fully support the issued tokens, with XAUT backed by the gold portion of its reserves. As of April 12th, XAUT's total support was 7,667.7 kg of gold, distributed across 644 gold bars, with an XAUT token market cap of approximately $797 million.
PAXG is issued by Paxos Trust Company, a trust company and custodian regulated by the New York State Department of Financial Services (NYDFS). PAXG similarly represents ownership of 1 troy ounce of LBMA good delivery gold bars per token. PAXG's monthly issuance is reported by a third-party audit company, with the report as of February 28th showing the company holds 209,160 ounces of gold (approximately 5,929 kg).
Compared to traditional gold ETFs or futures, both XAUT and PAXG's tokenized gold have no custody fees and have a smaller minimum purchase amount.
PAXG's fee structure differs from XAUT. Creating or destroying PAXG directly through the Paxos platform incurs a tiered fee based on transaction volume, and on-chain transfers are charged a 0.02% Paxos fee. In contrast, XAUT claims no custody fees but charges a 0.25% fee for direct purchases/redemptions. This means that for small-amount users, trading PAXG on secondary exchanges might be more cost-effective than direct operations through the Paxos platform, avoiding creation or destruction fees. However, frequent on-chain transfers will incur additional costs for PAXG.
Kinesis with Self-Operated Mint and Quorium's Gold Mine Model
Other tokenized gold products with a market cap over $100 million include Quorium (QGLOD) and Kinesis Gold (KAU). QGLOD's business model is particularly unique, with its held gold essentially being gold mine reserves rather than spot gold. Although the project claims to have regular reports on gold reserves, PANews found that these webpages can no longer be opened. Therefore, it is impossible to understand QGLOD's reserve situation. The information is blurry, contradictory, and lacks key details from independent third-party verification. Especially the concept of "undeveloped reserves" - how it provides stable support for liquidity tokens and how auditing and valuation are conducted remain unresolved, bringing great uncertainty and risk to investors.
Moreover, QGOLD's market data shows some warning signals. Its relatively high market cap (around $270 million) is accompanied by an abnormally low daily trading volume (around $100,000), concentrated on a few lesser-known exchanges. This severe mismatch between market cap, trading volume, and exchange liquidity, coupled with insufficient transparency, makes QGLOD's safety seem unconvincing.
Kinesis Gold's pricing method differs from PAXG or XAUT, using 1 token to represent 1 gram of gold. Its core differentiation lies in its unique revenue-sharing model. Unlike PAXG and XAUT, which merely track gold prices, KAU returns part of the platform's transaction fees to holders in the form of gold (KAU). However, this revenue is neither fixed nor risk-free, directly depending on Kinesis platform's overall transaction volume and fee income. Additionally, Kinesis has launched a corresponding virtual card, allowing users to directly use KAU for daily consumption. In terms of transparency, Kinesis opts for audits every six months and supports physical delivery every 100 grams. Kinesis official materials indicate that Kinesis operates a 5,600 square meter mint and refinery, Kinesis Mint, producing high-quality gold and silver ingot products.
In terms of market circulation, XAUT and PAXG remain the most liquid tokenized gold, tradable on multiple mainstream centralized exchanges and DEXs. KAU can be traded on its own Kinesis Exchange platform and centralized exchanges like BitMart and Emirex, with slightly lower liquidity.
Beyond tokenized gold, many traditional precious metal traders also support cryptocurrency as a payment method. This gold exposure mainly applies to spot trading, with cryptocurrency serving only as a payment method, not a fundamental change in business model. Additionally, such trading methods typically require higher one-time investment thresholds, and many platforms trade products like gold coins or gold seals, requiring users to have product identification and premium discrimination abilities beyond the gold's inherent value.
Besides trading PAXG or XAUT and other tokenized gold, some centralized exchanges offer different gold trading categories. For instance, Bybit provides gold Contract for Difference (CFD), which allows traders to speculate on asset price movements without actually owning the asset. This trading is similar to index contract trading in financial markets, where users merely track gold price trends and open contract orders without ultimately delivering spot gold. Among mainstream centralized exchanges, only Bybit seems to offer such products, though many traditional XAU/USD CFD platforms now accept cryptocurrency deposits, such as FP Markets, Fusion Markets, and easyMarkets. This trading method is more suitable for professionals familiar with gold forex trading rather than crypto investors.
Moreover, despite gold tokens possessing RWA attributes, their adoption on mainstream DeFi lending platforms appears limited. Apart from PAXG being stakeable on Morpho for yield, leading protocols like Aave and Compound have not accepted gold tokens as native collateral. This might stem from several factors: first, reliable and decentralized gold price oracles could be challenging, which is crucial for liquidation mechanisms; second, potential regulatory uncertainties; third, compared to ETH or mainstream stablecoins, the market demand for gold tokens as collateral might be relatively low.
Overall, the most mainstream method of exposure to gold assets in the current crypto market is likely still holding mainstream, highly liquid gold tokens such as PAXG or XAUT. Additionally, while there are many similar tokenized gold products, users may need to consider the safety issues involved due to the challenges of identifying issuers and transparency. Purchasing physical gold directly from traditional precious metal traders who accept cryptocurrency payments provides the most direct ownership, but also comes with higher barriers and potential product premiums. In the DeFi field, the ways of participating in gold-related assets remain limited, which may be a challenge for most RWA assets to deeply integrate with on-chain finance.
In the current downward cycle, Bitcoin holders are beginning to turn their attention to real gold, which is both a testament to the maturation of the crypto market and potentially a value counterattack by digital gold into the real world.
