Who’s Challenging Tether in Tokenized Gold? Inside a Growing Market

Tokenized Gold:- Recent reports that Tether has become one of the largest gold holders on the planet have thrust the tokenized gold market into the spotlight.

The global market for tokenized gold has expanded rapidly. As of writing, it has reached an on-chain market cap of approximately $5.8 billion, up from just $1 billion at the start of 2025.

With gold prices surging from $3,858 per ounce to over $5,200 amid geopolitical uncertainty, Tether’s gold holdings to back its XAUT token have gained attention. In Q4 2025, Tether purchased an additional 27 tons of gold, bringing its total reserves to roughly 130 tons, valued at $24 billion.

This arguably makes Tether the largest gold-holding entity outside central banks, and makes its dominant in the tokenized gold space.

Tokenized Gold has been a major driver of RWA growth this year, growing from around $1B in TVL at the start of the year to over $4B now. pic.twitter.com/yegrgs5K94

— DefiLlama.com (@DefiLlama) December 30, 2025

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Tether’s Competitor in Tokenized Gold market

Tether Gold (XAUT) dominates the gold-backed stablecoin market, with a market cap of $2.87 billion and 24-hour trading volume of approximately $850 million. Its dominance is clear by the fact that it accounts for roughly 60% of the total supply. Its liquidity, transparency, and Swiss-vaulted backing have made it the preferred option for institutional and digital-native investors.

But Tether is far from the only player. PAX Gold (PAXG), issued by Paxos under New York DFS regulation, leads as the compliance-first alternative on second number. With a market cap of $2.32 billion and 24-hour volume surpassing $1.1 billion, each token represents 1 fine troy ounce of LBMA-certified gold.

Data from DeFiLlama shows that on-chain gold exposure is still heavily concentrated between PAXG and XAUT, forming a near-duopoly. Over the past 30 days, PAXG leads in on-chain liquidity with $51.03 million, ahead of XAUT’s $38.58 million.

In aggregate value, XAUT slightly leads with $3.079 billion (50.6% of total tokenized gold across 79 protocols), while PAXG stands at $2.91 billion (47.9%) across 104 protocols.

At the protocol level, XAUT’s holdings are concentrated within its native contract and large DeFi venues like Aave V3. PAXG, by contrast, is distributed more widely across centralized exchanges and DeFi infrastructure, including Binance, KuCoin, Gemini, Uniswap v3, and multiple lending protocols. This distribution highlights their distinct user bases: XAUT caters to liquidity-heavy, custody-focused investors, while PAXG appeals to DeFi-native users seeking composable gold exposure.

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Who are the other players?

Beyond these heavyweights, mid-tier and emerging players are also innovating with regional focus, yield features, and DeFi integration.

Interestingly, according to a recent Fortune report, players are no longer satisfied with simply holding gold in digital form.

Platforms like Falcon Finance and Kinesis Gold are experimenting with yield-generating mechanisms, allowing investors to earn interest on tokenized gold holdings. They aim to encourage continuous investment in gold tokens, even as prices fluctuate. This would help in mitigating volatility risks traditionally associated with gold markets.

Kinesis Gold (KAU), with market market cap $423 million for example, is taking gold as a monetary system rather than merely a token. It allows users to earn yield through mere holding at 0.02%.

Matrixdock Gold (XAUM) with market cap of $84.7 million, targets Asia-focused institutional investors by integrating DeFi and CeFi rails.

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Making Yield on Gold Possible?

These developments matter as the dominating Tether Gold (XAU₮) does not offer yield on its own. Any yield associated with XAU₮ today comes from only DeFi activities such as providing liquidity to trading pools on decentralised exchanges like Uniswap. Users can earn a share of trading fees rather than interest from the token issuer itself.

As of now, XAU₮ functions purely as a gold-backed asset, with returns driven by market activity and protocol incentives and not by Tether.

However, Tether itself has expanded its footprint with XAUTO, a newer token supplementing XAUT’s market presence. There are smaller yet other notable entrants too which include Comtech Gold (CGO), focused on compliance-first infrastructure.

The other one is Gold Token SA (DGLD), which emphasizes secure regional issuance. In EU region, there’s VNX Gold (VNXAU), designed for European regulatory alignment with a custody-driven approach.

Thus, as the market evolves, the question isn’t just which token holds the most gold. It will be about which platforms can combine trust, compliance, and innovation to encourage investors and redefine how gold is hold.