Author: Theo

Translation: Deep Tide TechFlow

Deep Tide Guide: While the crypto world is still in heated debates about "real yields," a department store in Singapore is providing a tangible source of income for on-chain protocols through a century-old gold leasing model. This article dissects how the assets behind thUSD and thGOLD flow from the Mustafa Centre's jewelry counter to on-chain, making it a must-read for anyone interested in RWA and stablecoin yield sources.

Theo's protocol guides the demand of physical gold retailers like the Mustafa Centre in Singapore into on-chain yields, connecting a leasing market that has existed for over a hundred years with thUSD and thGOLD.

The Mustafa Centre sells about 1100 pounds of gold jewelry each month from just one store in Singapore. According to them, their inventory at any time is close to a ton, worth over 100 million dollars at current prices. However, they bear almost no risk from fluctuations in gold prices. This sounds contradictory but is a standard operation in physical gold trading, explaining why more and more on-chain gold yields actually come from this source.

Unchanging Principles

We spent an entire afternoon observing their operational process in their store. What impressed us was not the astonishing sales volumes but the way they manage their positions. Inventory is constant. If they sell 110 pounds of jewelry today, they buy back 110 pounds of gold on the same day. If they sell more tomorrow, they buy more. The gold inventory in the store is treated as a constant rather than a variable. The result is that this enterprise only makes a profit on each sale, nothing more. Even if gold prices go up by 20%, Mustafa won’t earn an extra 20% on that ton of inventory; if gold prices drop by 20%, they won't incur a loss. Their revenue depends on how much jewelry is sold, not on the movement of gold prices.

Retailers who let their inventories float with the market, whether intentionally or not, will end up making leverage bets on gold prices. Businesses that last for decades often choose not to do this, because running a jewelry business and engaging in commodity trading require different balance sheets and different investors.

Pricing Units Matter

Holding a ton of gold means having to put up a ton of gold physically. At current prices, this implies that retail operations carry nine-figure assets. Direct purchases would consume the capital that should be invested in store and operational funds. Therefore, what retailers do is essentially the same as what refineries, processing plants, and mints have done for over a hundred years: borrow gold and then pay to use it. This is the demand side of the gold leasing market. Lessors who have access to physical inventory provide gold, and lessees pay a certain rate to hold and use this gold, using inventory and forward orders as collateral. Lessees acquire gold without using capital and without assuming price risk, while lessors earn returns from an otherwise idle asset. We have explained this mechanism in detail in the article "The Gold Leasing Credit Market Behind thUSD." The key point now is that this type of demand is not speculative. It comes from operational businesses with real order books and exists regardless of market conditions because people will buy jewelry whether gold prices are high or low.

Not Out in the Open

The gold leasing market is indeed quite opaque, and it is necessary to face the limitations of publicly available information candidly. The London Bullion Market Association (LBMA) ceased the publication of the Gold Forward Offered Rate (GOFO) benchmark on January 30, 2015, so forward interest rates and leasing rates can no longer be publicly calculated as they were for the previous twenty years. GOFO was published daily from 1989 and was the basis for pricing gold swaps, forwards, and leases. When compiling the official gold reserves sequence, the World Gold Council directly excludes gold used as collateral, deposits, and swaps, but does not disclose the specific quantities excluded. There are no publicly available data regarding the overall leasing balance. What can be observed is the scale of the surrounding market. According to the World Gold Council, in June 2026, the daily trading volume of gold across OTC, exchanges, and ETFs totaled approximately 373 billion dollars. In London’s settlement system, more than 20 million ounces of gold are net settled daily among four market-making banks, and according to LBMA's settlement data, the value of these transfers was approximately 87 billion dollars per day in February of this year. This figure excludes a large number of real trading activities, as these statistics are net data, and according to the London Precious Metals Clearing Limited (LPMCL) itself, several categories of transfers are omitted. Currently, the on-ground gold inventory is approximately 219,900 tons, with around 36,500 tons held by central banks.

Anyone claiming to know the precise figures of the leasing market's scale is merely estimating. We are no exception, and we prefer to state this openly rather than pretend otherwise.

The Other End of Leasing

A lease always has two ends. Retailers want gold without price risks. On the other end, there must be someone who owns the gold and is willing to lend it out. Historically, this end has belonged to gold banks and a small number of funds that have vault relationships and credit teams capable of assessing the operational status of businesses in physical trade. The barrier has never been yield but rather entry qualifications. We accessed this market through Libeara. This is a tokenization platform incubated by SC Ventures, the venture capital arm of Standard Chartered Bank, which developed the "MG 999 On-Chain Gold Fund" in collaboration with FundBridge Capital. MG 999 is a structured collateralized private credit fund: while tracking the performance of spot gold, it offers loans secured by physical inventory, and Mustafa Gold was listed as its first borrower when the fund was established in December 2025. Libeara was the first to connect us with Mustafa's team. This structure is the key, not a footnote. Due diligence on counterparties, the governance of the fund, and regulatory packaging are handled by institutions specialized in this area. This is why this income stream can be recognized by sectors outside commodity trading.

thUSD and thGOLD are built on this market. The counterparties are businesses like Mustafa: real order books, regular credit assessments, and demand that exists without reliance on cryptocurrency risk appetite.

What Gold Leasing Means for On-Chain Yields

The gold leasing market has provided financing for physical gold trading for over a century. Retailers borrow gold, pay leasing rates, and do not assume the risk of price fluctuations. Lessors earn returns from gold that was previously idle.

The purpose of building thUSD and thGOLD is to channel these leasing incomes to token holders. The limiting factor has never been yield, but entry qualifications.