Tokenized gold passes DeFi stress test, but less than 2% is used as collateral

A recent report by RedStone highlights a significant adoption gap in the tokenized gold market, where only a small fraction of circulating supply is utilized within decentralized finance protocols. While tokenized gold spot trading volume reached $90.7 billion in the first quarter of 2024, only $63 million worth of Tether Gold and PAX Gold is currently deployed as collateral on Aave v3 and Morpho. This represents a mere 1.5% of the combined $4.2 billion market capitalization for these assets. Despite low utilization, the report confirms that tokenized bullion successfully passed a critical stress test during a sharp gold market sell-off in late March. Aave processed a significant cluster of XAUT liquidations without technical disruption, proving the reliability of these assets as collateral during periods of high volatility. This resilience is vital for the broader RWA sector, which has grown to over $43 billion in total value. The findings underscore that while infrastructure is maturing, further integration into lending markets remains a primary challenge for scaling tokenized commodities.