Tokenized Commodities Look Beyond Gold as Lending and Oil Open New Markets

Tokenized commodities are poised to expand far beyond a market traditionally dominated by gold, evolving into a sophisticated, multi-asset system capable of financing metals, facilitating energy trading, and enabling borrowing against a wide range of physical assets. According to leading executives across the decentralized finance and tokenization sectors—including representatives from Paxos Labs, Theo, and Energy Substantiation—putting commodities on public and private blockchain networks is beginning to offer utility that stretches well beyond simple digital ownership or passive price exposure.

Rather than merely making physical goods easier to buy and hold on-chain, industry leaders argue that tokenization is creating direct financial bridges. These networks connect everyday investors, family offices, and institutions seeking yield with operating businesses, refiners, and corporate treasuries that require critical inventory financing. By streamlining these processes, blockchain technology is beginning to unlock alternative liquidity pools and market access in sectors that have historically been reserved for massive multinational financial institutions and specialized trading houses.

Despite the ambitious scope of these expanding use cases, the starting point for the sector remains relatively modest, though it has experienced remarkable growth over the past year. According to data tracked by CoinGecko, the total market capitalization of tokenized commodities reached $5.55 billion by the end of March 2026. This represents a substantial upward trajectory from the $1.43 billion recorded at the beginning of 2025. Gold-backed tokens issued by established providers such as Paxos and Tether have driven this momentum, accounting for almost 90% of the total market growth during that timeframe.

For the uninitiated, tokenized commodities are blockchain-based digital tokens that legally or economically represent direct ownership of, or proportional exposure to, tangible physical assets, ranging from precious metals like gold and silver to globally traded industrial inputs like crude oil.

Gold Lending

Paxos Labs is actively betting that structured lending will unlock the next evolutionary stage for precious metal tokens. Its PAXGy token is backed directly by PAX Gold, with underlying reserves systematically deployed to vetted institutional borrowers. Under this model, each token is designed to become redeemable for progressively more PAXG as underlying lending rates are paid back to the protocol in ounce terms over time. This structure allows token holders to potentially compound and increase their physical gold holdings while retaining uninterrupted exposure to the asset’s market price.

The overarching value proposition of this model centers squarely on democratization and access. As Bhau Kotecha, co-founder of Paxos Labs, explained in an interview, gold lending has historically required a scale, operational infrastructure, and institutional relationships that remain completely unavailable to the vast majority of individual investors. Kotecha notes that strong demand is emerging across a diverse spectrum of participants, including retail individuals, family offices, and mid-sized institutions. Furthermore, allowing holders to borrow directly against their PAXGy token holdings represents a logical next step for the product ecosystem. However, industry observers note that lending returns are inherently not guaranteed, and any potential borrower defaults could theoretically erode the underlying value of the token.

Silver offers another parallel route into this burgeoning financing market, demonstrating that the mechanics pioneered in gold can successfully migrate to other precious metals. Theo’s flagship thSLVR product functions by systematically passing income generated from institutional silver leases directly to token holders, all while maintaining steady exposure to the underlying spot price of the metal.

Iggy Ioppe, Chief Investment Officer at Theo, sees future market growth originating from both sides of the supply chain—existing commodity owners and commercial users alike. He points to institutions seeking productive, yield-bearing collateral, refiners looking for efficient ways to finance raw inventory, and corporate treasuries searching for assets that can settle instantly across borders. Silver serves as the natural second step after gold, Ioppe notes, driven by robust industrial demand and an already well-established global leasing market. At the same time, he acknowledges that greater market volatility and a structurally tighter supply of immediately available physical metal introduce unique complexities to the silver tokenization opportunity.

Looking further ahead, Ioppe projects that the broader tokenized commodities market could expand into the tens of billions of dollars within the next five years, eventually surpassing $100 billion within a decade. Looking out 15 years, he anticipates that tokenization will no longer be viewed as an alternative experiment, but rather will become a deeply embedded part of ordinary, everyday commodity settlement and financing infrastructure.

The Oil Test

While precious metals have provided a comfortable testing ground, energy commodities like crude oil present a significantly larger logistical challenge—and, in the view of firms like Energy Substantiation, a correspondingly substantial market opportunity.

Demonstrating this push into the energy sector, Energy Substantiation recently expanded the availability of its WTIC token from the Ethereum network to Solana. According to the company’s official announcements, each WTIC token represents exactly one barrel of West Texas Intermediate crude oil, backed directly by verified physical inventory securely held in storage facilities.

JP Thieriot, co-founder and CEO of Energy Substantiation, revealed that the firm is already actively developing additional tokens tied to natural gas and Brent crude. Thieriot expects robust commercial demand to materialize from energy buyers seeking to hedge volatile procurement costs, investors looking for commodity exposure without futures account complexities, and energy suppliers requiring reliable working capital. Looking forward optimistically, he predicts that oil-backed tokens could eventually account for as much as a quarter of the broader physical oil market within the next decade.

Despite the bullish outlooks from various corners of the industry, executives hold diverging views on how quickly the energy sector can successfully follow in the footsteps of metals. Ioppe argued that the complex physical storage, transportation, and delivery requirements of bulk energy make income-generating energy tokens considerably harder to engineer and sustain. Conversely, Thieriot emphasized that establishing verifiable physical inventory, dependable custody arrangements, and seamless settlement mechanisms are absolute prerequisites for handling commodities that are continuously in physical motion.

Ultimately, the long-term expansion of tokenized commodities will depend heavily on the industry’s ability to seamlessly connect digital tokens to reliable, transparent physical markets while offering asset owners a compelling, practical reason to utilize blockchain rails over legacy systems.