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

I. Introduction: The Return of Hedging Demand in the New Cycle

Since 2025, geopolitical conflicts have been frequent, inflationary pressures persist, and major economies are experiencing sluggish growth, leading to a renewed demand for safe-haven assets. Gold, as a traditional safe-haven asset, has once again become the focus, with gold prices repeatedly hitting new highs, surpassing the $3000 per ounce mark, and becoming a safe haven for global capital flows. At the same time, as the integration of blockchain technology and traditional assets accelerates, "tokenization of gold" has become a new trend in financial innovation. It not only retains the value-preserving properties of gold but also possesses the liquidity, combinability, 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.

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

Although humanity has entered a highly digitalized financial era with a continuous emergence of various financial assets, gold has always maintained its position 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 it possesses natural scarcity and physical counterfeiting resistance but also because it embodies the result of thousands of years of long-term consensus in human society. In any macro cycle where sovereign currencies may depreciate, fiat currency systems may collapse, and global credit risk accumulates, gold has always been regarded 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 proven that fiat currencies cannot completely escape the fate of cyclical crises; gold's status has not been erased but rather has been given a role as a value anchor in each round of monetary crises. The 2008 global financial crisis, the wave of global monetary easing after the 2020 pandemic, 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 friction, the risk of US debt default, and the stubbornness of global inflation have combined to push gold back above the important threshold of $3000/ounce, triggering a shift in the logic of global asset allocation.

The actions of central banks are the most intuitive reflection of this trend. According to data from the World Gold Council, global central banks have consistently increased their gold holdings over the past five years, particularly with "non-Western countries" such as China, Russia, India, and Turkey showing particularly active participation. In 2023, the net purchase of gold by global central banks exceeded 1,100 tons, setting a historical high. This round of gold repatriation is essentially not a short-term tactical operation, but rather a deep-seated consideration for strategic asset security, the diversification of sovereign currencies, and the increasingly declining stability of the dollar system. Against the backdrop of a continuous restructuring of global trade patterns and geopolitics, gold is once again viewed as the reserve asset with the most trusted boundaries. From the perspective of currency sovereignty, gold is replacing U.S. Treasury bonds, becoming an important anchor point for several countries' central banks to adjust their foreign exchange reserve structures.

More structurally significant is the fact that gold's safe-haven value is being re-recognized by the global capital markets. Compared to credit assets such as U.S. Treasury bonds, gold does not rely on the issuer's ability to pay, thereby avoiding default or restructuring risks. In the context of high global debt and continuously expanding fiscal deficits, gold's "no counterparty risk" attribute is particularly prominent. Currently, the debt-to-GDP ratios of major economies around the world generally exceed 100%, with the United States reaching over 120%. The increasing questioning of fiscal sustainability makes gold irreplaceably attractive in an era of weakened sovereign credit. In practice, large institutions, including sovereign wealth funds, pension funds, and commercial banks, are raising their allocations to gold as a 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 be programmatically encoded, which makes it feel somewhat "heavy" in the digital age. However, this does not mean it will be eliminated, but rather it prompts gold to undergo a new round of digital upgrade. We observe that the evolution of gold in the digital world is not a static preservation of value, but an active integration with financial technology logic towards "tokenization of gold". This shift is no longer a competition between gold and digital currencies, but a combination of "value-anchoring assets and programmable financial protocols". The on-chain aspect of gold injects liquidity, composability, and cross-border transfer capabilities into it, enabling gold to not only serve as a vehicle of wealth in the physical world but also to begin acting as an anchor for stable assets in the digital financial system.

It is particularly noteworthy that gold, as a store of value, complements rather than absolutely replaces Bitcoin, known as "digital gold". The volatility of Bitcoin is far higher than that of gold, lacking sufficient short-term price stability, and in an environment of high uncertainty regarding macro policies, it is more likely to be seen 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 when constructing a global investment portfolio, holding an irreplaceable underlying "financial neutrality" position.

Overall, whether from the perspective of macro financial security, the reshaping of the currency system, or the reconstruction of global capital allocation, the status of gold as hard currency has not weakened with the rise of digital assets. On the contrary, it has been further enhanced due to global trends such as "de-dollarization," geopolitical fragmentation, and sovereign credit crises. In the digital age, gold is 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 both the new and old financial systems.

3. Tokenization of Gold: On-chain Representation of Assets

Tokenization of gold is essentially a technology and financial practice that maps gold assets as encrypted assets within a blockchain network. It represents the ownership or value of physical gold as on-chain tokens through smart contracts, allowing gold to no longer be confined to the static records of vaults, warehousing receipts, and banking systems, but to circulate and combine freely on-chain in a standardized, programmable form. Tokenized gold is not the creation of a new type of financial asset, but rather a reconstruction method that injects traditional bulk 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 wholly new value-bearing structure.

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

From a micro-mechanism perspective, the generation of tokenized gold typically relies on two paths: one is the custodial model of "100% physical collateral + on-chain issuance," and the other is the protocol model of "programmable mapping + verifiable asset certificates." The former, such as Tether Gold and PAX Gold, has physical gold custodians behind them, ensuring that each Token corresponds one-to-one with 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 liquidity of Tokens by binding programmable asset certificates with gold batch numbers. Regardless of the path taken, the core goal is to construct a mechanism for the trusted 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 issues of fragmentation, high barriers to entry, and low liquidity.

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, trading 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 divisible, can be settled in real-time, and can flow across borders through on-chain native assets, transforming gold from a "static asset" into a dynamic financial instrument characterized by "high liquidity + high transparency." This feature greatly expands the available scenarios for gold in DeFi and the global financial market, enabling it to not only serve as a store of value but also participate in various financial activities such as collateralized lending, leveraged trading, yield farming, and even cross-border clearing and settlement.

Furthermore, tokenization of gold is driving the shift of the gold market from centralized infrastructure to decentralized infrastructure. In the past, the value transfer of gold heavily relied on traditional centralized nodes such as the London Bullion Market Association, clearing banks, and vault custodians, leading to issues like information asymmetry, cross-border delays, and high costs. Tokenized gold, using on-chain smart contracts as its carrier, has constructed a permissionless and trustless intermediary-free system for the issuance and circulation of gold assets, making the processes of rights confirmation, settlement, and custody of traditional gold transparent and efficient, significantly lowering market access barriers, enabling 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 safe-haven attributes and store of value function of gold but also expands the functional boundaries of gold as a digital asset in the new financial system. Against the backdrop of the global trend of financial digitalization and the multipolarization of currency systems, 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. Whoever can build a tokenized gold standard that combines compliance, liquidity, combinability, and cross-border capabilities in this process is likely to gain the discourse power of future "on-chain hard currency".

4. 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 prototype market for "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 current industry leaders, not only leading in market capitalization and liquidity over other projects but also benefiting from a mature custody system, higher transparency, and strong brand endorsement.