Executives from Paxos Labs, Theo, and Energy Substantiation believe that tokenized commodities are set to evolve from a gold-centric market into a broader financing system for metals, energy trading, and borrowing against physical assets.
They argue that tokenization on blockchain networks should facilitate not just easier purchases, but also connect investors looking for exposure and income with businesses in need of inventory financing. This could potentially open up markets that have historically been accessible mainly to larger institutions.
As of March 2026, the market capitalization of tokenized commodities reached $5.55 billion, a significant increase from $1.43 billion at the start of 2025, according to CoinGecko. Gold-backed tokens from Paxos and Tether comprised nearly 90% of this growth.
Tokenized commodities are blockchain-based tokens that signify ownership or exposure to physical assets such as gold, silver, and oil.
Gold Lending
Paxos Labs is focusing on lending as a means to unlock further growth in this sector.
Their PAXGy token is supported by PAX Gold, with reserves allocated to institutional borrowers. Each token can be redeemed for additional PAXG as the underlying lending rates are repaid in ounces, potentially allowing holders to increase their gold holdings while maintaining price exposure.
Co-founder Bhau Kotecha emphasized in an interview that the main advantage is access. Traditionally, gold lending has required significant scale and relationships that many investors lack.
Kotecha anticipates interest from individuals, family offices, and institutions, considering borrowing against PAXGy as a likely next step. However, he cautioned that lending returns aren't guaranteed and that borrower defaults could diminish the token's value.
Silver presents another avenue in this financing landscape. Theo's thSLVR product channels income from institutional silver leases to holders while allowing them to retain exposure to the metal's price.
Theo's Chief Investment Officer Iggy Ioppe predicts growth will stem from current commodity owners and users, including institutions seeking productive collateral and refiners financing their inventory. He described silver as a “natural second” after gold, citing its industrial demand and established leasing market, though he acknowledged that increased volatility and a tighter supply of available metal complicate matters.
Ioppe envisions a tokenized commodities market valued in the tens of billions within five years, potentially exceeding $100 billion within a decade. He expects that within 15 years, tokenization will become a standard practice in commodity settlement and financing.
The Oil Challenge
Oil represents a more significant logistical challenge, but EnSub sees it as a considerable opportunity.
The company has recently expanded its WTIC token from Ethereum to Solana. Each token symbolizes one barrel of West Texas Intermediate (WTI) crude oil, backed by verified physical inventory.
Co-founder and CEO JP Thieriot mentioned that they are also developing natural gas and Brent tokens. He anticipates demand from energy buyers looking to hedge costs, investors seeking exposure, and suppliers needing working capital, predicting that oil tokens could represent a quarter of the oil market within ten years.
There are differing opinions among executives on how quickly the energy sector can follow metals. Ioppe pointed out that the complexities of storage and transport make it more challenging to create income-generating energy tokens. Thieriot underscored the necessity for “verifiable inventory, workable custody, and settlement” for commodities that are constantly in motion.
Ultimately, expansion will hinge on linking tokens with reliable physical markets and providing owners with compelling incentives to utilize them.