Tokenized Gold Sees High Demand, but DeFi Adoption Remains Limited

Tokenized gold has seen significant demand this year as physical bullion reached record highs. Gold futures rallied above $5,600 per troy ounce in the first quarter, with tokenized gold spot trading volume reaching $90.7 billion.

However, a recent report by RedStone found that very little of this tokenized gold is being used as collateral in decentralized finance (DeFi). Only about $63 million worth of Tether Gold (XAUT) and PAX Gold (PAXG) is currently being used on Aave v3 and Morpho.

This represents just 1.5% of the tokens' combined $4.2 billion market capitalization. Despite this limited adoption, tokenized gold has shown resilience during a recent market stress test.