Tokenized gold held up during a sharp market downturn, with Aave v3 processing a cluster of liquidations without disruption. Only 1.5 percent of the asset's combined market capitalization is deployed in DeFi lending protocols.
A RedStone report documented the disparity. Tokenized gold spot trading volume reached $90.7 billion in the first quarter, a period when gold futures rallied above $3,500 per troy ounce.
The two dominant tokenized gold assets—Tether Gold (XAUT) and PAX Gold (PAXG)—account for the $63 million currently posted as collateral across Aave v3 and Morpho, out of a combined $4.2 billion market cap.
The stress event came on March 23, when Aave processed its largest cluster of XAUT liquidations. Gold had sold off roughly 10 percent over the preceding week—its worst weekly performance in more than four decades. JPMorgan precious metals strategist Greg Shearer called the move an "extremely brutal flush."
Gold futures have since fallen more than 26 percent from their January peak, pressured by expectations of higher U.S. interest rates.
The RedStone findings show tokenized gold can function as DeFi collateral under stress, but the thin collateral utilization points to a real infrastructure gap as the tokenized RWA sector scales. That sector—spanning private credit, U.S. Treasurys and tokenized equities—surpassed $43 billion in total value in June, according to Token Terminal.
Centralized exchanges are also moving into tokenized assets. A CoinGecko report put the emerging crypto-TradFi market at $6.6 billion as of June, covering centralized efforts to put traditional financial products on-chain.
