Tokenized Gold Becomes Key Collateral in Crypto Lending
Tokenized gold has become an increasingly popular collateral option in crypto lending, with Aave's $25 million XAUT-backed debt ceiling reaching capacity within 24 hours. Arch Lending now accepts PAXG and XAUT as collateral for loans at up to 75% LTV.
Himanshu Sahay, co-founder and chief technology officer of Arch, notes that investors are using tokenized gold as a usable part of the digital financial system, rather than just tracking bullion prices. 'The most interesting thing about the demand we're seeing around tokenized gold is that people aren't just treating these assets as a way to get exposure to the price of gold,' Sahay said.
The XAUT market has seen high concentration, with one position accounting for over 75% of all debt secured by XAUT. Despite this, the market's liquidity and volatility are considered relatively conservative.