The tokenized commodities market is expanding beyond gold into lending arrangements and energy products, according to executives at Paxos Labs, Theo and Energy Substantiation. These blockchain-based tokens represent ownership of or exposure to physical assets including gold, silver and oil.
The sector has grown significantly in recent years. Tokenized commodities reached $5.55 billion in market capitalization by the end of March 2026, up from $1.43 billion at the beginning of 2025, according to CoinGecko data. Gold-backed tokens from Paxos and Tether accounted for nearly 90% of that growth.
Lending as Growth Driver
Paxos Labs is positioning lending as the next phase of development. Its PAXGy token is backed by PAX Gold, with reserves deployed to institutional borrowers. Holders receive returns as underlying lending rates are paid back in ounce terms, potentially increasing their gold holdings while maintaining price exposure. Paxos co-founder Bhau Kotecha told CoinDesk that gold lending has historically required scale and relationships unavailable to many investors.
Silver represents another avenue into commodity financing. Theo's thSLVR product passes income from institutional silver leases to holders while maintaining exposure to the metal's price. Theo Chief Investment Officer Iggy Ioppe identified growth potential from institutions seeking productive collateral, refiners financing inventory and corporate treasuries seeking assets that settle quickly.
Ioppe forecasted the tokenized commodities market could reach tens of billions within five years and exceed $100 billion within a decade. Within 15 years, he expects tokenization to become part of ordinary commodity settlement and financing. He noted that silver faces greater volatility and a tighter supply of available metal compared to gold.
Energy Opportunities and Challenges
Oil presents larger logistical obstacles but what Energy Substantiation views as substantial opportunity. The company expanded its WTIC token, which represents West Texas Intermediate crude backed by verified physical inventory, from Ethereum to Solana on October 2. The company is developing natural gas and Brent tokens alongside its oil product.
Energy Substantiation co-founder and CEO JP Thieriot predicted that oil tokens could account for a quarter of the oil market within 10 years, drawing demand from energy buyers hedging costs, investors seeking exposure and suppliers needing working capital.
Executives diverge on the timeline for energy tokenization. Ioppe argued that storage and transport make income-generating energy tokens harder to build, while Thieriot emphasized that verifiable inventory, workable custody and settlement are essential for commodities continuously in motion.
Remaining Hurdles
Market expansion will depend on connecting tokens to reliable physical markets and giving owners compelling reasons to use them. Key challenges include custody arrangements, logistics and borrower risk. Lending returns on tokenized commodities are not guaranteed, and borrower defaults could erode token values.
