Tether’s Tokenized Gold Floods DeFi With Aave Leading the Way

Tether’s tokenized gold, XAUT, is increasingly finding its way into decentralized finance (DeFi) platforms, with Aave and Uniswap leading the charge. As of early September 2026, approximately $102.9 million worth of XAUT was deposited across DeFi venues, marking the first time deposits surpassed the $100 million threshold.

Aave is the dominant player, holding 74.2% of XAUT DeFi deposits, primarily through its V3 and V4 markets. The protocol’s XAUT deposits surged from around $40 million in early June 2026 to approximately $76.7 million by mid-August, representing roughly 91.7% growth in about ten weeks. The newer V4 markets are attracting fresh capital, while earlier markets saw outflows.

On Aave, XAUT functions as an ERC-20 token that can be used as collateral for loans, allowing users to borrow stablecoins while maintaining exposure to gold’s price movements. The research highlights that Aave has successfully managed liquidations of XAUT positions during volatile market conditions. However, XAUT used in lending pools currently represents only about 1.5% of the combined market capitalization of XAUT and PAXG, the two leading tokenized gold products.

Tether has also been expanding the supply of XAUT, minting approximately 119,670 additional tokens worth around $495 million in late September 2026. Each token is backed by physical gold held in Swiss vaults. The research raises an open question about whether the new supply reflects fresh demand or the redeployment of existing holdings.

The concentration of XAUT deposits in Aave is notable, as the protocol holds the lion’s share of the tokenized gold lending market. The gap between the supply of XAUT and its utilization in DeFi remains significant, with Tether’s recent mint far exceeding the current DeFi deposit base. If a substantial portion of the new supply flows into lending markets, the utilization figure could see a notable increase.