Tokenized gold has spent most of its short history performing a single function: tracking the price of gold. Paxos Labs and Theo are now working to change that rolling out yield-bearing commodity tokens in a market that research values at more than $5 billion.

From Static Holdings to Income Streams

Paxos Labs launched PAXGy on September 24, 2026. The token is backed by PAXG, the firm's existing tokenized gold product, and draws on institutional gold leasing to accumulate additional gold reserves over time.

Theo entered the field earlier. In January 2026, the firm introduced thGOLD, a product that generates a yield of approximately 2% through gold lending. In September 2026, Theo broadened its offering with tokenized silver backed by $40 million in active leases, extending to silver the lending model it had already applied to gold.

The Numbers Behind the Push

Trading volume in tokenized gold reached $90.7 billion in the first quarter of 2026, a single quarter that surpassed the total for all of 2025. As of October 2026, more than 450,000 wallets hold tokenized commodities, a figure that has risen year over year.

Tokenized gold remains the dominant force in the sector. PAXG and XAUT lead the category, and the segment's overall value has crossed the $5 billion mark, with some estimates placing it in the $5 billion to $6 billion range. Paxos Labs estimates that roughly $530 billion in gold sits in traditional ETFs that generate no yield — a figure that leaves the entire tokenized commodity sector at only a small fraction of the traditional market it is reaching toward.

Why Yield Changes the Conversation

Spot-price tokens solved an access problem: they let people own gold on a blockchain, move it around the clock, and sidestep the logistics of storing physical bullion. Products such as PAXGy and thGOLD build on that foundation by emphasizing DeFi composability, institutional-grade custody, and a pathway into traditional lending markets.

Composability means a token can plug into other on-chain applications, serving as collateral or liquidity elsewhere while still earning its base yield. A gold token that generates lease income can also back a loan within a lending protocol — a capability a conventional gold ETF share cannot easily offer.

What It Means for the Market

Gold leasing has historically been the domain of institutional players, and wrapping that activity in a token could extend the resulting yield to a far wider audience, from retail holders to funds already active on-chain.

Paxos benefits from building PAXGy directly on its established PAXG base, while Theo holds a head start of several months and a broader multi-metal lineup. Both firms brought their newest products to market in September 2026, placing their approaches in front of holders at the same time.

The model carries a distinct risk profile. Any yield from leasing depends on borrowers honoring their obligations, meaning returns come with counterparty exposure that plain spot tokens do not carry. Both the roughly 2% yield on thGOLD and PAXGy's gradual reserve accumulation rest on that same foundation, which makes borrower performance the variable to watch as the category takes shape.

Source: CryptoBriefing