Tokenized commodities eye next phase of growth as gold, silver and oil move onchain

While the early years of real-world asset tokenization on blockchain networks focused primarily on simplifying the purchase and holding of precious metals, sector leaders argue that the true potential of the technology lies in putting those physical assets to work. By connecting investors seeking yield and market exposure with businesses that desperately need inventory financing, blockchain rails are opening up sophisticated commodity markets that were once restricted exclusively to large, traditional financial institutions.

The baseline for this market remains modest yet rapidly accelerating. Data from CoinGecko shows that the total market capitalization of tokenized commodities reached $5.55 billion at the end of March 2026, marking a substantial leap from the $1.43 billion recorded at the beginning of 2025. Gold-backed tokens issued by major players like Paxos and Tether have driven nearly 90% of this growth, establishing a trusted foothold for digital ownership of physical bullion.

In this context, tokenized commodities are defined as blockchain-based cryptographic tokens that represent direct ownership of, or fractional exposure to, tangible physical assets stored in secure vaults, including gold, silver, and crude oil.

Gold Lending

Paxos Labs is actively betting that institutional lending will unlock the next evolutionary stage for tokenized gold.

The firm’s PAXGy token is backed by PAX Gold, with the underlying reserves dynamically deployed to institutional borrowers. Under this model, each token is specifically designed to become redeemable for increasing amounts of PAXG as underlying lending rates are paid back in physical ounce terms. This mechanism allows token holders to potentially compound their physical gold holdings over time while simultaneously retaining direct exposure to the market price of the metal.

Bhau Kotecha, co-founder of Paxos Labs, emphasized that accessibility is the core value proposition of the initiative. Historically, participating in sophisticated gold lending markets has required a massive scale, deep capital reserves, and institutional relationships that are completely unavailable to standard investors, family offices, and smaller funds.

Kotecha noted that demand is originating from a diverse mix of individuals, family offices, and institutional players, with borrowing against PAXGy positioned as a logical next step for the ecosystem. At the same time, industry observers note that lending returns are inherently not guaranteed, and any potential borrower defaults could theoretically erode the value of the token.

Silver offers another highly viable route into this burgeoning financing market, providing a parallel use case to gold. Theo’s innovative thSLVR product functions by passing income generated from institutional silver leases directly to token holders while maintaining their exposure to the underlying price movements of the metal.

Iggy Ioppe, Chief Investment Officer at Theo, believes that future growth will be driven heavily by existing commodity owners and active users. This includes institutions looking for productive collateral, industrial refiners seeking efficient ways to finance raw inventory, and corporate treasuries searching for assets that can settle instantly across borders.

Ioppe described silver as the "natural second" asset class to follow gold, pointing to robust industrial demand and an already established global leasing market. However, he also cautioned that greater market volatility and a tighter supply of readily available physical metal can complicate execution.

Looking ahead, Ioppe forecasts that the broader tokenized commodities market will swell to a value worth tens of billions of dollars within the next five years, eventually surpassing $100 billion within a decade. Looking out over a 15-year horizon, he anticipates that tokenization will cease to be a novelty and instead become a standard, embedded part of ordinary commodity settlement and financing operations worldwide.

The Oil Test

While precious metals have paved a relatively smooth path for tokenized assets, crude oil presents a significantly greater logistical challenge—and, in the view of Energy Substantiation, a substantially larger market opportunity.

The firm officially expanded its WTIC token from the Ethereum network to Solana, a move designed to enhance transaction speed and reduce friction. According to the company’s official announcements, each token represents precisely one barrel of West Texas Intermediate (WTI) crude oil, backed directly by verified physical inventory held in storage.

JP Thieriot, co-founder and CEO of Energy Substantiation, revealed that the company is already actively developing additional tokens representing natural gas and Brent crude. Thieriot anticipates strong future demand from energy buyers looking to effectively hedge their operating costs, investors seeking diversification and exposure, and independent suppliers who require flexible working capital. He boldly predicts that oil tokens could eventually capture up to a quarter of the total physical oil market within a decade.

Despite the optimistic outlook, executives remain divided on how quickly the energy sector can successfully replicate the trajectory of precious metals. Ioppe argued that the complex requirements of physical storage, pipeline transport, and delivery make income-generating energy tokens considerably harder to engineer and maintain. Conversely, Thieriot emphasized that establishing verifiable inventory, workable custody frameworks, and reliable settlement procedures are absolute prerequisites for managing commodities that are continuously in motion.

Ultimately, the broader expansion of the tokenized commodity sector will depend entirely on building seamless, trustworthy connections between digital tokens and reliable physical markets, while providing owners with a compelling, practical reason to utilize blockchain infrastructure for everyday trade.