Tokenization of Gold: Redefining the On-Chain Paradigm for Hedge Assets

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

Since 2025, the global economic environment has become complex and volatile, 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 breaking through the $3000 per ounce mark. At the same time, as blockchain technology accelerates its integration with traditional assets, "tokenization of gold" has emerged as a new trend in financial innovation. It retains the value-preserving properties of gold while also possessing 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.

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

Despite the fact that humanity has entered a highly digitalized financial era with various financial assets continually emerging, gold maintains 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 natural scarcity and physical counterfeiting resistance but also because it embodies the long-term 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 has always been regarded as the final line of defense.

In the past few decades, gold has been marginalized at times. However, it has been proven that fiat currency cannot completely escape the fate of cyclical crises, and gold's status has not been erased; rather, it has been reassigned a role as a value anchor in every round of monetary crisis. The global financial crisis of 2008, the wave of global monetary easing after the pandemic in 2020, and the high inflation and interest rate shocks since 2022 have all led to a significant rise in gold prices. Especially after 2023, multiple factors such as geopolitical friction, the risk of U.S. debt defaults, and stubborn global inflation have combined to push 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 direct reflection of this trend. According to data from the World Gold Council, central banks around the world have continuously increased their gold holdings over the past five years, with emerging market countries showing particularly active behavior. In 2023, global central bank net purchases of gold exceeded 1,100 tons, setting a historical new high. This round of gold repatriation is essentially not a short-term tactical operation, but a deep-seated consideration stemming from strategic asset safety, the diversification 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 viewed as the reserve asset with the most trustworthy boundaries.

More structurally significant is the fact that gold's safe-haven value is being re-recognized in the global capital markets. Compared to credit assets such as U.S. Treasury bonds, gold does not depend on the issuer's repayment ability, and there is no risk of default or restructuring. Therefore, against the backdrop of high global debt levels and expanding 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 some countries reaching over 120%. The increasing questioning of fiscal sustainability makes gold irreplaceably attractive in an era of weakened sovereign credit. Large institutions, including sovereign wealth funds, pension funds, and commercial banks, are all raising their allocation of gold to hedge against systemic risks in the global economy.

Of course, gold is not a perfect financial asset; its trading efficiency is relatively low, physical transfer is difficult, and it is hard to program, which makes it seem quite "heavy" in the digital age. However, this does not mean it is being eliminated, but rather it prompts gold to undergo a new round of digital upgrades. The evolution of gold in the digital world is not a static preservation of value, but 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, enabling gold to play the role of a wealth carrier not only in the physical world but also to begin serving as a stable asset anchor within the digital financial system.

It is worth noting that gold, as a store of value, has a complementary rather than absolute substitution relationship with Bitcoin, the "digital gold." Bitcoin's volatility is significantly 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, continues to maintain 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" position.

Overall, whether from the perspective of macro financial security, the reconstruction of the monetary system, or the restructuring of global capital allocation, gold's status as hard currency has not diminished 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 the stabilizing force of 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, bridging the old and new 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 on a blockchain network. It maps the ownership or value of physical gold into on-chain tokens through smart contracts, allowing gold to no longer be limited to static records in vaults, warehousing documents, and banking systems, but to circulate and combine freely on-chain in a standardized and programmable form. Tokenized gold is not a creation of a new type of financial asset, but 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 brand new value-bearing 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 provides a 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 for "on-chain value-backed assets." Tokenization of gold, in a sense, is an extension and elevation of the stablecoin concept, pursuing not only price anchoring but also being supported by real hard assets that have no credit default risk. Unlike fiat-backed stablecoins, gold-backed tokens naturally escape the volatility and regulatory risks of a single sovereign currency, possessing cross-border neutrality and long-term inflation resistance. This is particularly important against the backdrop of the increasing regulatory and geopolitical sensitivities surrounding the dollar-dominated stablecoin landscape.

From a micro-mechanism perspective, the generation of tokenized gold typically relies on two paths: one is a custody model of "100% physical collateral + on-chain issuance", and the other is a protocol model of "programmatic mapping + verifiable asset certificates". The former, as seen in some projects, has physical gold custody institutions behind them, ensuring that each Token corresponds to a certain amount of physical gold and is regularly audited and reported off-chain. The latter, seen in some innovative projects, 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 trustworthy representation, liquidity, and settlement of gold on-chain, thereby achieving real-time transferability, divisibility, and combinability of gold assets, breaking the traditional gold market's issues of fragmentation, high thresholds, and low liquidity.

The greatest value of tokenized gold lies not only in the technological advancement 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 splittable, can be settled in real-time, and is capable of cross-border movement through an on-chain native asset model, 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, allowing it to not only 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 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 circulation of gold heavily relied on centralized nodes such as traditional financial institutions, leading to persistent issues like information asymmetry, cross-border delays, and high costs. Tokenized gold, utilizing on-chain smart contracts, has constructed a system for the issuance and circulation of gold assets that requires no permission and relies on no trusted intermediaries, making the processes of certifying, settling, and custody of traditional gold transparent and efficient, significantly lowering market entry barriers, allowing retail users and developers to equally access the global gold liquidity network.

Overall, tokenization of gold represents a profound value reconstruction and integration of traditional physical assets into the blockchain world. It not only inherits the 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 towards 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 that accompanies the evolution of financial sovereignty and technological paradigms. Those who can build a tokenized gold standard that combines compliance, liquidity, composability, and cross-border capabilities during this process are likely to gain the discourse power of the future "on-chain hard currency."

4. Analysis and Comparison of Mainstream Tokenization Gold Projects

In the current cryptocurrency financial ecosystem, tokenization of gold has emerged as a bridge connecting the traditional precious metal market with the new on-chain asset system, leading to the birth of a number of representative projects. These projects explore multiple dimensions such as technical architecture, custody mechanisms, compliance pathways, and user experience, gradually constructing a market prototype 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 vary, reflecting that the tokenization of gold track is still in a stage of competition and undefined standards.

Currently, the most representative tokenization gold projects include some products launched by well-known companies. Some of these projects can be considered leaders in the current industry, not only leading other projects in terms of market capitalization and liquidity but also gaining an advantageous position in user trust and exchange support due to their mature custody systems, high transparency, and strong brand endorsement.

Some projects are launched by leading stablecoin companies, with the main feature being their one-to-one peg to standard gold bars in the London gold market, where each Token corresponds to 1 ounce of physical gold held in Switzerland. This project relies on the ecosystem behind it, possessing a first-mover advantage in terms of liquidity, trading channels, and stability. However, it is relatively conservative in disclosure and transparency, as users cannot directly view the binding information of each Token to specific gold bar numbers on-chain. This black-box asset custody method is controversial in the crypto community, which has high demands for decentralization. In addition, its compliance layout is still primarily aimed at international offshore users, making the entry threshold relatively high for investors looking to invest in tokenized gold through formal financial channels.

In comparison, some others