Tokenized Gold Collateral Ratio Stands at 1.5%

Tokenized gold has maintained its liquidation function in the DeFi lending market; however, the actual collateral utilization ratio is only 1.5% of the combined market capitalization of Tether Gold and Paxos Gold. According to the Redstone report, the spot trading volume of tokenized gold reached $90.7 billion in the first quarter, with gold futures prices exceeding $5,600 per troy ounce. The scale used as collateral in DeFi lending protocols is approximately $63 million, which is 1.5% of the combined market capitalization of the two tokens at $4.2 billion. On March 23, Aave processed the largest liquidation volume related to Tether Gold, during which gold prices fell by 10%. However, the operational feasibility as collateral assets and actual adoption are separate issues; tokenized gold is an asset issued on the blockchain based on physical gold. While its price is linked to gold, liquidity, price oracles, liquidation structures, and protocol support are necessary for it to be used as collateral in DeFi lending. Redstone pointed out that despite the rise in gold prices, most Tether Gold and Paxos Gold were simply held or traded. Tokenized gold is part of the RWA market, which exceeded $43 billion in size as of June. This case demonstrates that tokenized gold has functioned as DeFi collateral during periods of volatility, but given that the actual collateral ratio is only 1.5%, the future expansion of its utilization depends on liquidity and protocol support.

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