Tokenized Gold Proves Resilient as DeFi Collateral Amid Market Stress

Tokenized gold has proven resilient as DeFi collateral during market stress tests, but adoption remains limited. The asset saw a surge in demand this year as physical bullion hit record highs, with tokenized gold spot trading volume reaching $90.7 billion in the first quarter.

The rally was largely driven by gold futures climbing above $5,600 per troy ounce. However, despite the significant market activity, only about $63 million worth of Tether Gold (XAUT) and PAX Gold (PAXG) is currently being used as collateral on Aave v3 and Morpho.

This represents just 1.5% of the tokens' combined $4.2 billion market capitalization. Tokenized gold has already weathered a meaningful market test, with Aave processing its largest cluster of XAUT liquidations without disruption during a sharp sell-off in gold on March 23.