Tokenized commodities look beyond gold as lending and oil open new markets

Paxos Labs, Theo and Energy Substantiation execs see growth coming from putting physical assets to work, with precious metals leading and energy presenting a tougher test.

Tokenized commodities could grow from a market dominated by gold into a broader system for financing metals, trading energy and borrowing against physical assets, according to executives at Paxos Labs, Theo and Energy Substantiation.

Putting commodities on blockchain networks should do more than make them easier to buy, the executives say. It could connect investors seeking exposure and income with businesses that need inventory financing, opening markets traditionally reserved for large institutions.

The starting point remains modest. Tokenized commodities’ market capitalization reached $5.55 billion at the end of March 2026, up from $1.43 billion at the beginning of 2025, according to CoinGecko. Gold-backed tokens from Paxos and Tether accounted for almost 90% of that growth.

Tokenized commodities are blockchain-based tokens that represent ownership of, or exposure to, physical assets such as gold, silver and oil.

Its PAXGy token is backed by PAX Gold PAXG$4,183.11, with reserves deployed to institutional borrowers. Each token is designed to become redeemable for more PAXG as underlying lending rates are paid back in ounce terms, allowing holders to potentially increase their gold holdings while retaining price exposure.

“The big proposition is access,” co-founder Bhau Kotecha told CoinDesk in an interview. Gold lending has historically required scale and relationships unavailable to many investors, he said.

Kotecha sees demand from individuals, family offices and institutions, with borrowing against PAXGy a possible next step. Lending returns are not guaranteed, and borrower defaults could erode the token’s value.

Silver offers another route into that financing market. 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 sees growth coming from existing commodity owners and users: institutions seeking productive collateral, refiners financing inventory and corporate treasuries seeking assets that settle quickly.

Silver is “the natural second” after gold, he said, citing industrial demand and an established leasing market, although greater volatility and a tighter supply of available metal complicate the opportunity.

Ioppe forecasts a tokenized commodities market worth tens of billions within five years and more than $100 billion within a decade. Within 15 years, he expects tokenization to become part of ordinary commodity settlement and financing.

Oil presents a larger logistical challenge, and, in EnSub’s view, a substantial opportunity.

The company expanded its WTIC token from Ethereum to Solana on Oct. 2. Each token represents one barrel of West Texas Intermediate (WTI) crude backed by verified physical inventory, according to its announcement.

Co-founder and CEO JP Thieriot said natural gas and Brent tokens are under development. He expects demand from energy buyers hedging costs, investors seeking exposure and suppliers needing working capital, predicting oil tokens could account for a quarter of the oil market within 10 years.

The executives differ on how quickly energy can follow metals. Ioppe argued that storage and transport make income-generating energy tokens harder to build. Thieriot said “verifiable inventory, workable custody and settlement” are essential for commodities continuously in motion.

Expansion will therefore depend on connecting tokens to reliable physical markets, and giving owners a compelling reason to use them.

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