Commodity token issuers bet on metal lending to grow a $5.55 billion market built on gold

CoinGecko's figures put $4.12 billion of new value into tokenized commodities over the 15 months to March, a rise of about 3.9 times ^[15]. Take out the Paxos and Tether gold tokens ^[6] and every silver, oil and other commodity product combined added a little over $400 million ^[16]. Theo's silver product launched backed by $40 million in active leases, CoinDesk reported ^[8], about 0.7% of the March total ^[17].

Paxos Labs is building its lending product on top of an existing gold token ^[1]. "The big proposition is access," co-founder Bhau Kotecha told CoinDesk ^[2]. He said gold lending has historically required scale and relationships many investors do not have ^[3]. A holder who moves across keeps the gold price and picks up a stake in a loan book, or rather in the borrowers behind it ^[4].

In silver, the income a token holder collects is paid by whoever leases the metal ^[7]. Ioppe, Theo's chief investment officer, expects users to include refiners financing inventory, institutions seeking productive collateral and corporate treasuries that want assets that settle quickly ^[18]. He called silver "the natural second" after gold, citing industrial demand and an established leasing market ^[9]. CoinDesk added that greater volatility and a tighter supply of available metal complicate the case ^[10].

Oil has the thinnest record. CoinDesk's report does not give the number of WTIC tokens outstanding, so EnSub's product cannot be measured against CEO JP Thieriot's prediction that oil tokens could account for a quarter of the oil market within 10 years ^[20]. In Ioppe's view, an energy token that pays income is harder to put together because the oil has to be stored and moved ^[13]. For Thieriot, "verifiable inventory, workable custody and settlement" are essential when a commodity never stops moving ^[14].

This could go more than one way. Lending might grow mostly among people who already hold gold tokens, lifting balances in yield products while total market value barely moves. Silver leasing could instead scale until available metal runs short ^[10]. In Thieriot's version, verified oil inventory finds the cost hedgers and working-capital borrowers he expects ^[20], and natural gas and Brent tokens follow ^[12].

We think metal lending grows first, because it is built on the gold tokens that already make up most of the market. In our view energy stays the smallest line while storage and transport remain unsolved ^[13]. The counter-case is Thieriot's. Ioppe's own decade figure is about 18 times the March market ^[21], and Theo sells one of the products that would have to supply it ^[7]. We would be wrong if WTIC's supply outgrows Theo's $40 million of silver leases ^[8] before Paxos Labs opens borrowing against PAXGy ^[1]. The wider test is whether products outside Paxos and Tether gold keep the share of growth they had through March, a little over a tenth ^[16].