1 Market Status and Landscape

1.1 Rapid Growth of the Gold RWA Market by 2025

• In terms of market capitalization, the gold RWA market has seen nearly a threefold increase this year. According to CoinFound data, as of December 19, 2025, the overall market capitalization of gold RWA has exceeded $3 billion. At the beginning of 2025, the total market capitalization was even below $1 billion.

• From the perspective of participants, the number of gold RWA assets and supporting ecosystems has rapidly increased this year, with more institutions entering the market. Before early 2025, the entire gold RWA market appeared quite quiet, with only XAUT (Tether Gold) and PAXG (Paxos Gold) playing a duet, while WTGOLD (WisdomTree Gold Token) was barely visible on the sidelines.

• Currently, gold RWA assets are primarily distributed on the Ethereum chain.

1.2 Market Landscape: XAUt and PAXG Compete for Dominance, New Growth is Noteworthy

By 2025, the gold RWA market has evolved into a "dual-head leadership, new entrants breaking through" multi-polar distribution. As of December 19, 2025, various mainstream protocols have formed significant functional stratification based on their positioning differences.

• XAUt (Tether Gold): The Dominant Force in Liquidity and Derivatives

– Market Capitalization: Approximately $1.63 billion, firmly holding the top position in the sector.

– Core Advantage: Leveraging Tether's vast stablecoin ecosystem, XAUt possesses the deepest depth and widest liquidity in gold RWA.

– Application Scenarios: As the preferred gold collateral for centralized exchanges and on-chain derivatives protocols, it is extremely suitable for high-frequency traders and institutions for large-scale hedging.

• PAXG (Paxos Gold): The Benchmark for Compliance and Regulation

– Market Capitalization: Approximately $1.43 billion.

– Core Advantage: Strictly regulated by the New York State Department of Financial Services (NYDFS). Its unique "one-to-one correspondence query" mechanism allows users to query the corresponding gold bar number, purity, and physical weight in real-time through on-chain addresses.

– Application Scenarios: The preferred tool for regulated financial institutions to allocate on-chain assets.

• KAU (Kinesis Gold): Payment and Inclusive Finance

– Core Innovation: Introduces a "gold interest model," returning a portion of network transaction fees to holders, breaking the traditional perception of gold as a "non-productive asset."

– Payment Ecosystem: By the end of 2025, its market capitalization reached $300 million. Utilizing a debit card system, it enables "gold consumption" in over 40 regions, transforming gold into a frequently circulating daily currency.

• XAUm (Matrixdock Gold): Yield-Driven and Institutional Flexibility

– Growth Momentum: Market capitalization skyrocketed from millions at the beginning of the year to over $60 million, leading the sector in growth rate.

– Technical Features: Adopts a "dual-mode asset architecture," supporting instant exchange between ERC-20 and ERC-721 (NFT). When holdings reach standard gold bar specifications (e.g., 1kg), they can be mapped to represent specific physical ownership as NFTs.

– DeFi Engine: Deeply integrates cross-chain communication protocols (such as Chainlink CCIP), supporting the capture of arbitrage profits in a multi-chain ecosystem.

1.3 Increased Participation of Institutional Investors

• Entry and Productization by Financial Giants: Pilot programs by DBS Bank and Standard Chartered Bank: Under the regulatory framework of the Monetary Authority of Singapore (MAS), these traditional banks have launched cross-border settlement pilots based on gold RWA in 2025. They utilize tokenized gold to replace traditional physical gold bars, reducing settlement times from days to minutes.

• Institutional Transformation of Custodial Facilities: (1) Popularization of multi-signature custody solutions: In 2025, institutional-grade custody platforms like Fireblocks and Copper fully integrated XAUt, PAXG, and XAUm. This means family offices and hedge funds no longer need to manage private keys directly but can perform "vault-level" operations through SOC2-compliant enterprise interfaces; (2) Phemex institutional account system: Trading platforms like Phemex support institutional investors in using gold tokens directly for cross-platform margin collateral through their launched institutional-grade API and sub-account system, significantly enhancing capital utilization.

• Maturity of Regulatory and Compliance Systems: (1) Impact of the U.S. GENIUS Act: The "Stablecoin GENIUS Act," passed in July 2025, provides a clear legal definition for physically-backed tokens (including gold tokens), greatly alleviating legal concerns for institutional entry. (2) Real-time Proof of Reserves (PoR) becomes the industry standard: By the end of 2025, mainstream gold RWA projects have generally integrated Chainlink PoR oracles. For example, both PAXG and XAUm support 24/7 on-chain audits, allowing institutional investors to access snapshots of physical gold bar inventories from custodians (such as Paxos Trust or banks partnered with Matrixport) at any time.

2 Macroeconomic Perspective and Trends

2.1 Unstable Macroeconomic Environment, Continuous Rise of Gold and Gold RWA

In 2025, the global macroeconomic environment exhibits high uncertainty.

• On one hand, debt pressure and fiat currency credit risks are both on the rise. As public debt levels in major economies reach historical highs, investor trust in sovereign credit fiat currencies has structurally weakened. The demand for non-debt assets in 2025 reached a decade-high.

• On the other hand, not only inflation risks but also geopolitical conflicts are exacerbating the instability of the macro environment. In this context, gold has become increasingly important as a safe-haven asset. Gold prices continued to rise in 2025, repeatedly hitting historical highs. Similarly, this has driven up the prices of gold RWA assets. In the short term, such trends are expected to persist.

2.2 Expanding Demand for "On-Chain Gold" from Stablecoins to Payment Scenarios

With the development of stablecoins, the application of on-chain financial assets in payment, trading, and settlement scenarios has been widely validated and is rapidly developing. However, a noteworthy phenomenon is:

• Currently, mainstream stablecoins like USDC are backed by cash equivalents and short-term U.S. Treasury securities, but their supply is only over a trillion dollars, which is clearly insufficient to support global applications. If the scope is expanded to include long-term U.S. Treasuries or other risk assets, stablecoins will inevitably bear similar term and credit risks as commercial banks.

• However, on the other hand, due to the instability of the global macro environment, ensuring the stability of the underlying asset value for payment, settlement, and even future on-chain collateral scenarios has become an important consideration. A still hot example is USDT and Tether, which has been continuously increasing the proportion of gold and Bitcoin in its reserve assets in recent years, and has been increasing its gold reserves to enhance its resistance to inflation and U.S. Treasury credit risks.

In short, currently, the "on-chain financial world" needs "gold," and driven by the development of stablecoins and applications in payment and settlement scenarios, this demand is expanding. However, physical gold and gold ETFs are insufficient to meet this demand:

1. The "physical form" greatly limits the feasibility of gold as a payment medium. In the existing financial system, gold lacks programmability, divisibility, and high-frequency liquidity, making it difficult to embed into modern financial networks, especially unable to meet the needs of cross-border payments and on-chain finance. Compared to fiat currencies and stablecoins, physical gold cannot be directly used for electronic settlement and lacks the ability to interact with payment gateways, clearing networks, and smart contracts.

2. Similarly, although gold ETFs provide convenience for investing in gold within traditional frameworks, their adaptability and flexibility are clearly insufficient in the "on-chain" context, making it difficult to meet the core requirements for asset "high activity, callable, and combinable" in a decentralized era. Specifically, gold ETFs serve as an important tool connecting the gold market and financial markets, allowing investors to gain price exposure without actually holding physical gold. However, its essence remains a restricted product within the traditional financial system; particularly, gold ETFs are classified as securitized assets, which cannot achieve peer-to-peer transfers or real-time settlements, making them unsuitable for payments and lacking the ability to embed into on-chain financial protocols.

3. Additionally, for investors, gold ETFs have an extra drawback: purchasing a gold ETF merely grants a legal rights certificate, not ownership of the gold. Essentially, it remains a "closed financial instrument."

Therefore, the on-chain world needs "gold," and it needs a "form-matching" gold, specifically:

• A trustworthy form of "asset component" that provides "gold" for the on-chain world, bringing a credible, stable, and combinable value anchor.

• A "gold" that possesses programmability and combinability, flexibly integrating with DeFi ecosystem lending protocols, liquidity pools, and yield aggregation mechanisms.

Thus, the demand for gold-related RWAs is emerging.

2.3 A New Generation of Financial Systems is Coming, Gold RWA is an Important Component

In the U.S., the on-chain financial assets are accelerating under regulatory support, and "asset tokenization" seems to be the form of the next generation of financial systems.

• In December 2025, the U.S. Securities and Exchange Commission (SEC) issued a No Action Letter to the Depository Trust Company (DTC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC), authorizing it to provide tokenization services for specific real-world assets in a controlled production environment. This authorization covers highly liquid assets such as U.S. stocks, ETFs, and U.S. Treasury securities, opening a compliant channel for "on-chain" traditional capital markets and indicating that mainstream regulation is supporting asset on-chain practices.

• Looking back further, in the second half of 2025, SEC Chairman Paul Atkins publicly stated multiple times that "asset tokenization is the future trend of capital markets" and promoted discussions related to Project Crypto, including the classification framework and regulatory applicability for tokenized securities.

• Even earlier, the passage of the GENIUS Act (2025) laid the legal foundation for the compliant use of stablecoins and asset on-chain practices.

Moreover, this trend is not limited to the United States but is evolving into a common direction at the global financial system level.

• The Bank for International Settlements (BIS) proposed a framework for the technological form and asset structure of the "next generation financial system" in its 2025 Annual Economic Report: BIS clearly stated that the traditional financial system is transitioning from an architecture centered on accounts and centralized ledgers to a new paradigm based on tokenization and programmable platforms. BIS describes this system as a financial infrastructure operated by various types of tokenized assets, including:

1. Tokenized forms of central bank reserves (as the ultimate settlement asset)

2. Tokenized commercial bank deposits or regulated stablecoins (as payment and liquidity tools)

3. Tokenized forms of government bonds and other high-quality assets (as safe assets and collateral for financial markets)

• BIS emphasizes that the core value of tokenization lies not in "simply mapping assets to the blockchain," but in integrating payments, clearing, settlement, and asset transfers onto the same programmable infrastructure, thereby significantly reducing cross-border transaction costs, shortening settlement cycles, and minimizing systemic friction. This judgment is highly consistent with the SEC's support for securities tokenization and the DTCC's promotion of on-chain clearing practices.

• Naturally, within this framework, real-world assets (RWA) are seen as a key bridge connecting the real financial system with on-chain financial infrastructure. Among various RWAs, gold holds a unique position: as a globally recognized store of value, a long-term safe asset, and a high-quality collateral, it naturally meets the BIS's emphasis on "highly credible, low credit risk assets." When gold is introduced into the on-chain system in the form of RWA, it can not only serve as a value storage tool but also participate in core financial functions such as on-chain payments, clearing, collateral, and cross-border settlements.

In summary, a new generation of financial systems is emerging, and within this system, there is a need for gold in the form of "RWA."

3 Uses of Gold RWA

3.1 Programmable "Safe-Haven Asset"

Gold has long been regarded as a globally recognized safe-haven asset and store of value, and gold RWA introduces programmability and financial combinability on this basis. This brings additional benefits:

1. Divisibility and Combinability: Gold can be finely divided into the smallest pricing units, embedded in DeFi, custodial accounts, or institutional-grade financial contracts;

2. Programmable Rules: By setting transfer, locking, clearing, or triggering conditions through smart contracts, gold can transform from a "passively held asset" to an "actively participating asset in financial logic";

3. On-Chain Transparency: Custody, issuance, circulation, and redemption paths are verifiable on-chain, reducing reliance on centralized intermediaries.

One direct manifestation of these benefits is the ability to earn returns while being a "safe-haven." For example, holders of XAUm can participate in protocols like AlphaLend, Navi, and Suilend to earn returns.

3.2 Value Medium in Payment, Trading, and Cross-Border Payment Networks

In addition to functions like inflation resistance and value storage, gold can also be embedded as a trading medium and payment asset in the future digital financial system. For instance, with the rapid expansion of stablecoins and RWAs, gold tokens are expected to become a neutral payment interface linking on-chain finance with the real economy.

Specifically, the current stablecoin system exhibits a clear dollar-centric characteristic, with its underlying asset structure highly concentrated in U.S. Treasury securities. While this structure enhances liquidity, it also introduces geopolitical, regulatory spillover, and credit concentration risks. The emergence of gold tokens provides a systemic buffer for this framework. In the context of a gradually multipolar global payment network (such as the parallel development of mBridge, BRICS Pay, and other local currency settlement systems), gold tokens have the potential to become "bridging clearing assets":

• They do not replace sovereign currencies;

• But serve as a neutral interface between different currency systems and payment networks, reducing friction and political gaming costs.

In this architecture, the role of gold RWA has far exceeded that of an "investment asset," evolving into a foundational component of the new generation of global financial networks. At this level, gold RWA may not compete with stablecoins but rather form a strategic complement to their liquidity structure: stablecoins handle high-frequency circulation, while gold RWA provides a low credit risk value base.

3.3 Core Collateral in On-Chain Clearing, Settlement, and Collateral Systems

• On one hand, in DeFi scenarios, gold tokens (such as XAUT and PAXG) are gradually being viewed as "neutral collateral." Unlike fiat stablecoins, gold does not rely on any single sovereign credit; its price is determined by global market consensus, providing stronger stability in extreme macro or geopolitical situations. This makes it an important supplement for hedging systemic risks in stablecoin systems in lending, synthetic assets, and structured protocols.

• On the other hand, in CeFi and derivatives markets, gold RWA can also drive structural innovation in margin systems. Leading trading platforms can support gold tokens as cross-currency margin assets, allowing institutional investors to participate in leveraged trading and risk hedging directly with gold positions without converting to fiat or stablecoins. This mechanism essentially realizes the "release of gold capital efficiency": gold is no longer just a passive allocation asset but becomes a liquidity unit that can continuously participate in financial activities.

3.4 Bridging Asset Connecting Traditional Finance and On-Chain Finance

From a systemic perspective, an important role of gold RWA is to lower the entry barriers for traditional financial institutions into the on-chain system. For banks, asset management institutions, and clearing institutions:

• Gold is a familiar asset;

• Custody, auditing, and compliance paths are relatively mature;

• Legal attributes are clear, and acceptance across jurisdictions is high.

Therefore, gold RWA often becomes the entry point for institutions to first attempt on-chain assets, on-chain clearing, or on-chain collateral, serving as an important "transitional asset" for traditional finance to move toward a tokenized world.

4 Risks and Challenges

Although gold RWA demonstrates significant advantages in liquidity, capital efficiency, and institutional neutrality, its hybrid form connecting real assets with on-chain financial systems still faces a series of structural risks and practical constraints. These risks do not negate the long-term value of gold RWA, but at the current stage of development, they must be systematically identified and assessed.

4.1 Centralization Risks

4.1.1 Physical Custody and Redemption Risks

The core premise of gold RWA is the one-to-one correspondence between on-chain tokens and off-chain physical gold. This relationship decisively relies on custodial institutions, vault operators, and redemption mechanisms in the real world, thus inevitably introducing centralized trust. The main risks are reflected in:

• Custody Concentration Risk: Most gold RWA projects rely on a few international vaults or custodial institutions. If operational interruptions, legal disputes, or extreme political events occur, it may affect the token's redemption capability;

• Redemption Friction: Physical redemptions often have minimum quantity thresholds, geographic restrictions, and time costs, partially offsetting the "on-chain immediacy" in off-chain processes;

• Liquidity Breakdowns in Extreme Scenarios: In systemic crises or regulatory conflicts, on-chain tokens may remain circulating, but off-chain physical deliveries may be restricted, creating a mismatch between "nominal liquidity" and "real liquidity."

Thus, while gold RWA enhances the financial usability of gold, its security still heavily depends on the robustness of the custodial system and legal enforceability.

4.1.2 Operational and Transparency Risks

The value foundation of gold RWA comes not only from gold itself but also from market trust in issuers, custodians, and auditing mechanisms. Potential risks include:

• Insufficient Audit Frequency and Depth: Some projects provide proof of reserves, but the audit cycles are long or lack real-time capabilities, making it difficult to meet institutional risk control requirements;

• Information Disclosure Asymmetry: Custody details, redemption terms, and legal structures are often scattered across multiple documents, making it challenging for ordinary users to assess comprehensively;

• Reputation Spillover Effects: If individual gold RWA projects experience credit events, it may negatively impact the entire sector, affecting market acceptance.

At this level, the risk characteristics of gold RWA are closer to "financial infrastructure-level products," with their success highly dependent on long-term reputation accumulation rather than short-term market performance.

4.2 Technical Risks: System Challenges of On-Chain Financial Complexity

Although gold RWA operates on mature public chains, its technology stack typically involves smart contracts, cross-chain bridges, oracles, and custodial interfaces, with the overall system security depending on the weakest link.

Key technical risks include:

• Smart Contract Vulnerability Risks: If there are vulnerabilities in token minting, burning, mapping, or cross-chain logic, it may lead to asset freezing, mismatches, or malicious exploitation;

• Cross-Chain and Interoperability Risks: Cross-chain bridges have historically been high-risk areas for on-chain security incidents. Once gold RWA becomes a cross-chain liquid asset, its systemic risk exposure increases;

• Oracle and Data Synchronization Issues: If there are delays or errors in on-chain synchronization of price, state, or reserve information, it may trigger chain reactions in liquidations or market distortions.

Unlike native crypto assets, the technical risks of gold RWA not only affect the tokens themselves but may also transmit to broader financial protocols through collateral, clearing, and payment systems, exhibiting stronger systemic spillover effects.

4.3 Regulatory Uncertainty Risks: Long-Term Variables Across Jurisdictions

Gold RWA exists at the intersection of commodities, securities, payment tools, and digital assets, and its regulatory attributes vary significantly across different jurisdictions, constituting a long-term uncertainty factor. This is mainly reflected in:

• Lack of Uniform Legal Qualities: Gold tokens may be viewed as commodity tokens, security tokens, or payment tools in different countries, with significant differences in applicable compliance frameworks;

• Cross-Border Compliance Complexity: Gold RWA inherently possesses cross-border liquidity attributes, but real-world foreign exchange management, precious metals regulation, and anti-money laundering rules still primarily follow territorial principles;

• Inconsistent Policy Rhythms: Even in major markets like the U.S. and the EU, where regulation is becoming more open, the attitudes and enforcement strength of different regulatory agencies may still vary over time.

This means that in the short term, gold RWA is more suitable for advancement through institutional pilots, regulatory sandboxes, and limited-scale applications, rather than unrestricted expansion.

Risk Warning

This report is based on publicly available information, industry interviews, third-party research, and reasonable analytical frameworks, aiming to explore the development trends and potential impacts of gold RWA. However, due to the current stage of market development and information disclosure conditions, the relevant conclusions still face the following major risks and uncertainties, which are hereby noted:

1. Data Completeness and Statistical Scope Risks

Gold RWA is still in a rapid evolution stage, and relevant data on market size, circulation, usage scenarios, etc., mainly comes from project disclosures, on-chain statistical tools, and third-party research institutions. Different sources may have discrepancies in statistical scope, calculation methods, and time dimensions. Some data may be outdated, estimated, or insufficiently covered.

2. Asset Custody and Redemption Execution Risks

The value foundation of gold RWA relies on the real existence of physical gold, compliant custody, and executable redemption arrangements. Although mainstream projects typically introduce third-party custody and auditing mechanisms, risks such as redemption delays, restricted redemptions, or mismatches in liquidity and delivery capabilities may still arise under extreme market volatility, legal disputes, or cross-jurisdictional conflicts.

3. Technical and Systemic Operational Risks

Gold RWA typically operates based on smart contracts, public chain infrastructure, cross-chain protocols, and oracle systems, with its overall security depending on the collaborative stability of multiple technologies. Potential contract vulnerabilities, abnormal oracle data, or network congestion can adversely affect asset transfers, collateral clearing, and payment settlement functions, leading to systemic risk spillover.

4. Uncertainty in Regulatory Policies and Legal Environment

Gold RWA involves the cross-identification of commodity, security, and payment attributes, with significant differences in regulatory classification, compliance, and policies across different countries and regions. Future adjustments to the regulatory framework and changes in enforcement standards may have substantial impacts on the issuance, circulation, custody, and usage scenarios of related products.

5. Market Liquidity and Price Volatility Risks

Although gold itself possesses long-term value stability characteristics, the secondary market for gold RWA is still in its early development stage, with its liquidity depth, participant structure, and price discovery mechanisms not yet mature. In specific environments, the price of gold RWA may deviate from the value of the underlying asset.

6. Risks of Research Assumptions and Forward-Looking Judgments

Some analyses in this report are based on forward-looking judgments regarding industry development trends, technological paths, and policy directions. Related assumptions may be adjusted due to macroeconomic conditions, technological advancements, or regulatory changes, and actual results may differ from expectations.

7. This report does not constitute investment advice.

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