Tokenized commodities could grow from a market dominated by gold into a broader system for financing metals, trading energy, and borrowing against physical assets, according to executives at Paxos Labs, Theo, and Energy Substantiation.
Putting commodities on blockchain networks should do more than simply make them easier to buy and sell, the industry leaders argue. It could fundamentally connect investors seeking exposure and steady income with businesses that desperately need inventory financing, thereby opening up lucrative markets that have historically been reserved exclusively for large, traditional financial institutions.
The starting point for this emerging asset class remains relatively modest, though expansion has accelerated quickly over the past year. Tokenized commodities reached a total market capitalization of $5.55 billion at the end of March 2026, marking a significant leap from the $1.43 billion recorded at the beginning of 2025, according to data from CoinGecko. Gold-backed tokens issued by major players like Paxos and Tether accounted for nearly 90% of that total growth.
For the uninitiated, tokenized commodities are blockchain-based digital tokens that represent direct ownership of, or financial exposure to, tangible physical assets such as gold, silver, and oil, bridging the gap between traditional physical trade and decentralized finance.
Gold Lending
Paxos Labs is betting heavily that institutional lending can unlock the next major stage of development for precious metal tokens.
Its PAXGy token is backed by PAX Gold (PAXG), with underlying reserves deployed directly to institutional borrowers. Each token is uniquely structured to become redeemable for increasing amounts of PAXG as underlying lending rates are paid back in ounce terms. This mechanism allows token holders to potentially increase their actual gold holdings over time while simultaneously retaining standard price exposure to the precious metal.
“The big proposition is access,” said co-founder Bhau Kotecha in an interview. He noted that gold lending has historically required a scale and network of relationships that remain completely unavailable to many everyday investors, family offices, and smaller institutions.
Kotecha highlighted that demand is emerging from a diverse group of participants, including individuals, family offices, and institutional funds, with borrowing directly against PAXGy anticipated as a possible next step for the platform. He also cautioned that lending returns are never guaranteed, noting that potential borrower defaults could erode the overall value of the token.
Silver offers another viable route into this expanding financing market, bridging industrial utility with blockchain efficiency. Theo’s thSLVR product passes income generated from institutional silver leases directly to token holders while maintaining their exposure to the metal’s underlying spot price.
Iggy Ioppe, Chief Investment Officer at Theo, sees future growth coming primarily from existing commodity owners and active users. These include institutions seeking productive collateral, refiners looking to finance their inventory, and corporate treasuries searching for liquid assets that settle almost instantly.
Ioppe described silver as “the natural second” choice after gold, pointing to its strong industrial demand and an already well-established leasing market. However, he acknowledged that greater market volatility and a tighter supply of readily available physical metal can complicate the opportunity.
Looking ahead, Ioppe forecasts a tokenized commodities market worth tens of billions of dollars within five years, expanding to more than $100 billion within a decade. Looking further out to a 15-year horizon, he expects tokenization to become a standard, ordinary part of everyday commodity settlement and financing operations.
The Oil Test
Oil presents a distinctly larger logistical challenge, yet in the view of Energy Substantiation—often known as EnSub—it also represents a substantially massive market opportunity.
The company expanded its WTIC token from the Ethereum network to Solana, aiming to capture higher speed and lower transaction friction. Each individual token represents exactly one barrel of West Texas Intermediate (WTI) crude oil, backed by verified physical inventory stored securely, according to the company’s official announcements.
Co-founder and CEO JP Thieriot revealed that natural gas and Brent crude tokens are already under active development. He anticipates robust demand originating from energy buyers seeking to hedge their operational costs, investors looking for commodity exposure, and suppliers who desperately need reliable working capital. Thieriot optimistically predicted that oil tokens could eventually account for a quarter of the global oil market within the next ten years.
Despite the optimism, industry executives differ notably on how quickly the energy sector can successfully follow the path carved out by metals. Ioppe argued that complex physical storage requirements and intricate transport logistics make income-generating energy tokens considerably harder to build and maintain securely.
Conversely, Thieriot emphasized that establishing verifiable inventory, workable custody arrangements, and reliable settlement processes are absolute essentials for commodities that are continuously in motion across global supply chains.
Ultimately, the broader expansion of tokenized commodities will depend heavily on successfully connecting digital tokens to reliable, transparent physical markets while giving owners a compelling, practical reason to utilize them in daily commerce and finance.
