Tokenized commodities could soon evolve from a market primarily dominated by gold into a much broader financial system. According to industry executives at Paxos Labs, Theo, and Energy Substantiation, the sector is shifting toward advanced capabilities like financing metals, trading energy, and allowing users to borrow directly against physical assets.
Rather than merely making commodities easier to purchase through blockchain networks, this evolution is designed to connect global investors seeking exposure and yield with businesses that urgently need inventory financing. In doing so, these platforms are opening up lucrative markets that have historically been restricted to large financial institutions and commodity trading houses.
At present, the baseline of the market remains modest, though it has experienced remarkable growth over recent periods. Data from CoinGecko shows that the total market capitalization of tokenized commodities reached $5.55 billion by the end of March 2026, marking a significant leap from the $1.43 billion recorded at the beginning of 2025. Gold-backed tokens issued by prominent players like Paxos and Tether accounted for nearly 90% of this overall expansion.
For clarity, tokenized commodities are blockchain-based digital tokens that represent either direct ownership of or financial exposure to physical assets such as gold, silver, oil, and other raw materials.
Gold Lending
Paxos Labs is betting heavily that institutional lending will unlock the next major phase of development for the tokenized asset sector.
The company’s PAXGy token is backed by PAX Gold, with its underlying reserves actively deployed to institutional borrowers. Under this model, each token is designed to become redeemable for an increasing amount of PAXG as the underlying lending rates are paid back in physical ounce terms. This mechanism allows token holders to potentially increase their total gold holdings over time while simultaneously retaining standard price exposure to the precious metal.
"The big proposition is access," Bhau Kotecha, co-founder of Paxos Labs, told CoinDesk in an interview. He noted that gold lending has historically required a scale and network of relationships that are entirely unavailable to ordinary investors.
Kotecha highlights that demand is coming from a diverse mix of retail individuals, family offices, and large institutional players. Furthermore, he views borrowing directly against PAXGy holdings as a natural next step for the ecosystem. At the same time, industry observers note that these lending returns are not entirely guaranteed, and any potential borrower defaults could theoretically erode the value of the token.
Silver offers another viable route into this expanding financing market. Theo’s thSLVR product is designed to pass income generated from institutional silver leases directly to token holders while maintaining continuous exposure to the spot price of the metal.
Iggy Ioppe, chief investment officer at Theo, sees future growth coming primarily from existing commodity owners and active market users. This includes institutions seeking productive collateral, refiners looking to finance their physical inventory, and corporate treasuries that require assets capable of settling rapidly.
Ioppe describes silver as "the natural second" step after gold, pointing to its robust industrial demand and an already well-established leasing market. However, he also acknowledges that greater price volatility and a tighter supply of available physical metal can complicate the opportunity.
Looking ahead, Ioppe forecasts that the broader tokenized commodities market could reach a valuation of tens of billions of dollars within five years, eventually expanding past $100 billion within a decade. Looking out 15 years, he anticipates that tokenization will become a standard, ordinary part of everyday commodity settlement and financing operations.
The Oil Test
While precious metals have paved the way, oil presents a significantly larger logistical challenge—and, in the view of Energy Substantiation, a substantially greater market opportunity.
The firm expanded its WTIC token offering from the Ethereum network to Solana. According to company announcements, each token represents precisely one barrel of West Texas Intermediate crude oil that is fully backed by verified physical inventory.
JP Thieriot, co-founder and CEO of Energy Substantiation, revealed that tokens tied to natural gas and Brent crude are currently under active development. He anticipates strong demand from energy buyers looking to hedge their operating costs, investors seeking alternative market exposure, and suppliers who require flexible working capital. Thieriot has 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 laid by metals. Ioppe argued that the complexities of physical storage and long-distance transport make income-generating energy tokens considerably harder to build and maintain. Conversely, Thieriot emphasized that establishing verifiable inventory, reliable physical custody, and seamless settlement mechanisms are absolute prerequisites for commodities that are continuously in motion.
Ultimately, the broader expansion of this market will depend heavily on successfully connecting digital tokens to reliable physical trading networks and giving market participants a truly compelling reason to adopt them in their daily operations.
