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PAXG 
XAUT Demand for tokenized gold surged this year as physical gold prices climbed to record highs, but according to a new report, only a very small number of these assets were used for decentralized finance, highlighting a huge adoption gap.
Spot trading volume of tokenized gold reached US$90.7 billion in the first quarter as gold futures prices soared above US$5600 per ounce. However, the report states that Tether Gold (XAUT) and PAX Gold (PAXG), currently used as collateral only on Aave v3 and Morpho, are worth approximately US$63 million, accounting for only 1.5% of the total market value of the two tokens of US$4.2 billion.
Thereport pointed out that despite limited adoption rates, tokenized gold has withstood an important market test.
On March 23, during a significant sell-off of gold, Aave handled its largest XAUT clearing cluster without interruption, demonstrating that tokenized gold can reliably function as DeFi collateral under market pressure.
The liquidation came after gold prices fell 10% the previous week, its worst weekly performance in more than four decades. Greg Shearer, precious metals strategist at JPMorgan Chase, described the selloff as an "extremely cruel liquidation."
At the end of March, tokenized gold clearing volume on Morpho and Aave peaked. Source: RedStone.
Gold futures have fallen more than 26% since peaking in January on expectations of higher U.S. interest rates, reducing demand for non-yielding assets such as precious metals.
The next obstacle to tokenization of gold may be DeFi adoption
The report's findings suggest that tokenized gold has shown resilience as a DeFi collateral, but adoption rates remain limited. With only a small proportion of market funds deployed in lending agreements, these data highlight key infrastructure challenges as tokenized real-world assets (RWAs) continue to expand.
Gold is part of the rapidly expanding tokenized RWA market, which also includes private credit, U.S. Treasuries, and the growing importance of stocks. In June, Token Terminal reported that the value of the field had exceeded US$43 billion.
At the same time, centralized cryptocurrency exchanges are rapidly embracing tokenized assets to promote the integration of traditional finance and digital assets. According to a recent report, as of June, the emerging "crypto TradFi" market had grown to US$6.6 billion.
