Tokenization of Gold: Reshaping the On-Chain New Paradigm of Safe-Haven Assets

Introduction: The Return of Hedging Demand in the New Cycle

Since the beginning of 2025, geopolitical conflicts have intensified, inflation pressures remain, and major economies are experiencing sluggish growth, leading to a renewed demand for safe-haven assets. Gold, as a traditional "safe asset," has once again become the focus, with gold prices reaching new highs, surpassing the $3000 per ounce mark, making it a haven for global capital. Meanwhile, with the accelerated integration of blockchain technology and traditional assets, "tokenization of gold" has emerged as a new trend in financial innovation. It not only retains the value-preserving properties of gold but also possesses the liquidity, composability, and smart contract interaction capabilities of on-chain assets. An increasing number of investors, institutions, and even sovereign funds are beginning to incorporate tokenized gold into their investment strategies.

Gold: The "hard currency" that remains irreplaceable in the digital age

Despite the fact that humanity has entered a highly digitized financial era, various financial assets continue to emerge, from fiat currency, government bonds, and stocks to the digital currencies that have risen in recent years, gold has maintained its status as the "ultimate store of value asset" due to its unique historical depth, value stability, and cross-sovereign currency attributes. Gold is referred to as "hard currency" not only because of its inherent scarcity and physical counterfeiting resistance but also because what it carries is not a credit endorsement of a specific country or organization, but the result of a long-standing consensus of human society over thousands of years. In any macro cycle where sovereign currencies may depreciate, fiat currency systems may collapse, and global credit risks accumulate, gold is always viewed as the last line of defense and the ultimate means of payment under systemic risk.

In the past few decades, especially after the collapse of the Bretton Woods system, gold was once marginalized, and its status as a direct settlement tool was replaced by the US dollar and other sovereign currencies. However, it has been proven that fiat currency cannot completely escape the fate of cyclical crises, and gold's status has not been erased; instead, it has been redefined as a value anchor in each round of monetary crisis. The 2008 global financial crisis, the global monetary easing wave after the pandemic in 2020, and the high inflation and interest rate fluctuations since 2022 have all led to a significant rise in gold prices. Especially after 2023, multiple factors such as geopolitical frictions, risks of US debt default, and persistent global inflation have brought gold back to the important threshold of $3000 per ounce, triggering a new shift in global asset allocation logic.

The actions of central banks are the most intuitive reflection of this trend. According to the World Gold Council, central banks globally have been continuously increasing their gold holdings over the past five years, particularly with countries like China, Russia, India, and Turkey, which are considered "non-Western countries," showing particularly active behavior. In 2023, the net purchase of gold by central banks worldwide surpassed 1,100 tons, setting a new historical record. This round of gold repatriation is essentially not a short-term tactical operation but is driven by deep considerations of strategic asset safety, the multipolarity of sovereign currencies, and the increasingly declining stability of the dollar system. In the context of the ongoing restructuring of global trade patterns and geopolitical dynamics, gold is once again seen as the most trusted boundary of reserve assets. From the perspective of monetary sovereignty, gold is replacing U.S. Treasury bonds, becoming an important anchor for many countries' central banks in adjusting their foreign exchange reserve structures.

More structurally significant is the fact that the safe-haven value of gold is regaining recognition in global capital markets. Unlike credit assets such as U.S. Treasury bonds, gold does not rely on the issuer's ability to pay and does not carry default or restructuring risks. Therefore, in the context of soaring global debt and persistent fiscal deficits, gold's "no counterparty risk" attribute is particularly prominent. Currently, the debt-to-GDP ratio of major global economies generally exceeds 100%, with the United States reaching over 120%. The increasing questioning of fiscal sustainability makes gold irreplaceably attractive in an era of weakening sovereign credit. In practical operations, large institutions, including sovereign wealth funds, pension funds, and commercial banks, are increasing their allocation to gold to hedge against systemic risks in the global economy. This behavior is changing gold's traditional "counter-cyclical + defensive" role, positioning it more as a "structurally neutral asset" in the long term.

Of course, gold is not a perfect financial asset; its trading efficiency is relatively low, physical transfer is difficult, and it is challenging to program, which makes it seem "heavy" in the digital age. However, this does not mean it is being eliminated; rather, it prompts gold to undergo a new round of digital upgrades. We observe that the evolution of gold in the digital world is not a static preservation of value, but rather an active integration of financial technology logic towards "tokenized gold." This transformation is no longer a competition between gold and digital currencies, but a combination of "value-anchoring assets and programmable financial protocols." The on-chain nature of gold injects liquidity, composability, and cross-border transfer capabilities, allowing gold to not only serve as a vehicle of wealth in the physical world but also to begin acting as an anchor of stable assets in the digital financial system.

It is particularly noteworthy that gold, as a store of value, has a complementary rather than an absolute substitute relationship with Bitcoin, the "digital gold." Bitcoin's volatility is much higher than that of gold, lacking sufficient short-term price stability, and in an environment of high macro policy uncertainty, it tends to be viewed as a risk asset rather than a safe-haven asset. Gold, with its large spot market, mature financial derivatives system, and widespread acceptance at the central bank level, still maintains the triple advantages of being counter-cyclical, low volatility, and highly recognized. From the perspective of asset allocation, gold remains one of the most important risk hedging factors in constructing a global investment portfolio, holding an irreplaceable underlying "financial neutrality" status.

Overall, whether from the perspective of macro financial security, the restructuring of the currency system, or the reconstruction of global capital allocation, gold's status as hard currency has not weakened with the rise of digital assets. Instead, it has been further enhanced by global trends such as "de-dollarization", geopolitical fragmentation, and sovereign credit crises. In the digital age, gold serves as both a stabilizing force in the traditional financial world and a potential value anchor for future on-chain financial infrastructure. The future of gold is not to be replaced, but to continue its historical mission as the "ultimate credit asset" through tokenization and programmability in the new and old financial systems.

Tokenization of Gold: On-chain Representation of Assets

Tokenization of gold is essentially a technology and financial practice that maps gold assets onto a blockchain network in the form of encrypted assets. It translates the ownership or value of physical gold into on-chain tokens through smart contracts, allowing gold to transcend the static records of vaults, warehouse receipts, and banking systems, and to circulate and combine freely on-chain in a standardized and programmable form. Tokenized gold is not the creation of a new type of financial asset, but a reconstruction method that injects traditional commodities into the new financial system in digital form. It embeds gold, a hard currency that spans historical cycles, into the "decentralized financial operating system" represented by blockchain, giving rise to a completely new value-carrying structure.

This innovation can be understood on a macro level as an important part of the global wave of asset digitization. The widespread adoption of smart contract platforms like Ethereum provides the underlying programmable foundation for the on-chain representation of gold; in recent years, the development of stablecoins has validated the market demand and technical feasibility of "on-chain value-backed assets." Tokenization of gold is, in a sense, an extension and elevation of the stablecoin concept, as it not only pursues price anchoring but also has real, non-credit default risk hard asset support behind it. Unlike stablecoins anchored to fiat currency, gold-backed tokens naturally escape the volatility of a single sovereign currency and regulatory risks, possessing cross-border neutrality and long-term inflation resistance. This is particularly important in the current context where the dollar-dominated stablecoin landscape increasingly raises regulatory and geopolitical sensitivity issues.

From a micro-mechanism perspective, the generation of tokenized gold usually relies on two paths: one is the "100% physical collateral + on-chain issuance" custodial model, and the other is the "programmable mapping + verifiable asset certificate" protocol model. The former includes Tether Gold and PAX Gold, both of which have physical gold custodians behind them, ensuring that each Token corresponds to a certain amount of physical gold, and regular audits and off-chain reports are conducted. The latter, such as Cache Gold and Digital Gold Token, attempts to enhance the verifiability and circulation of the Tokens by binding programmable asset certificates with gold batch numbers. Regardless of the path taken, the core goal is to build a mechanism for a trustworthy on-chain representation, liquidity, and settlement of gold, thereby achieving real-time transferability, subdivisibility, and combinability of gold assets, breaking the traditional gold market's fragmentation, high barriers to entry, and low liquidity issues.

The greatest value of tokenized gold lies not only in the technological advancements it represents but also in its fundamental transformation of the functionality of the gold market. In the traditional gold market, the trading of physical gold is often accompanied by high transportation, insurance, and storage costs, while paper gold and ETFs lack true ownership and on-chain composability. Tokenized gold attempts to provide a new form of gold that is split-able, can be settled in real-time, and can flow across borders through on-chain native asset forms, transforming gold from a "static asset" into a dynamic financial instrument characterized by "high liquidity + high transparency." This feature significantly broadens the available scenarios for gold in DeFi and global financial markets, allowing it not only to exist as a store of value but also to participate in multi-layered financial activities such as collateralized lending, leveraged trading, yield farming, and even cross-border settlement.

Furthermore, tokenization of gold is driving the shift of the gold market from centralized infrastructure to decentralized infrastructure. In the past, the value circulation of gold heavily relied on traditional centralized nodes such as the London Bullion Market Association, clearing banks, and vault custodians, resulting in issues like information asymmetry, cross-border delays, and high costs. Tokenized gold, utilizing on-chain smart contracts, has built a permissionless and trustless intermediary system for the issuance and circulation of gold assets, making the traditional gold verification, settlement, and custody processes transparent and efficient, significantly lowering the market entry threshold, allowing retail users and developers to equally access the global gold liquidity network.

Overall, tokenized gold represents a profound value reconstruction and system integration of traditional physical assets in the blockchain world. It not only inherits the risk-hedging properties and value storage function of gold but also expands the functional boundaries of gold as a digital asset in the new financial system. In the context of the global trend of financial digitalization and the multipolarization of the currency system, the reconstruction of gold on-chain is destined to be not just a temporary attempt, but a long-term process accompanied by the evolution of financial sovereignty and technological paradigms. Those who can build a tokenized gold standard that combines compliance, liquidity, combinability, and cross-border capability during this process may have the potential to dominate the discourse of "on-chain hard currency" in the future.

Analysis and Comparison of Mainstream Tokenization Gold Projects

In the current crypto-financial ecosystem, tokenized gold has emerged as a bridge connecting the traditional precious metals market with the new on-chain asset system, giving rise to a number of representative projects. These projects explore various dimensions such as technical architecture, custody mechanisms, compliance paths, and user experience, gradually constructing a market prototype of "on-chain gold." Although they all adhere to the basic principle of "physical gold collateral + on-chain mapping" in core logic, the specific implementation paths and focal points differ, reflecting that the tokenized gold sector is still in a stage of competition and undefined standards.

Currently, the most representative tokenization gold projects include: Tether Gold, PAX Gold, Cache Gold, Perth Mint Gold Token, and Aurus Gold, among others. Tether Gold and PAX Gold can be seen as the dual of the current industry.