Tokenized Gold Basis Trade Review ( Part 1 of 4: Executive Summary & Gold Market Context )
This is Part 1 of a 4-part comprehensive evaluation of tokenized gold assets (PAXG and XAUT) as potential backing assets for USDe. This post covers the executive summary, tokenized gold market structure, growth data, and central bank demand drivers. Parts 2 - 4 continue with remaining demand analysis, asset profiles, derivatives data, and the proposed framework.
1. Executive Summary
This report provides a comprehensive evaluation of tokenized gold assets (PAXG and XAUT) as potential backing assets for USDe, applying and extending Ethena’s Eligible Asset Framework. The analysis covers spot market characteristics, perpetual futures liquidity with exchange-level granularity, historical volume trends, order book depth, holder composition, fee structures, and a proposed minimum OI threshold framework for commodity/equity asset onboarding.
Key findings:
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The combined tokenized gold market exceeds $6B in market cap (XAUT: ~$3.7B; PAXG: ~$2.3B), representing over 96% of the tokenized gold sector and the dominant segment of the broader tokenized commodities market.
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XAUT aggregate OI across major venues stands at $293M; PAXG aggregate OI has reached $205M (Laevitas, April 2, 2026). XAUT OI is led by Bybit, followed by OKX, Bitget, and Binance. PAXG OI is dominated by Binance, followed by Bybit, Bitget, Deribit, and Coinbase. Both assets exceed the proposed $200M commodity OI threshold on eligible exchanges.
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XAUT derivatives activity has grown significantly 2025. Total daily perp volume across eligible exchanges peaked at approximately $900M in late March 2026, up from under $100M in late 2025.
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Neither asset meets the existing $1B aggregate OI threshold designed for crypto-native assets. This report proposes a recalibrated commodity/equity framework with a $200M threshold, justified by gold’s ~15% annualized volatility, roughly 3.5x less volatile than BTC (~55%), 4.5x less volatile than ETH (~70%), and 5.5x less volatile than SOL (~85%). Both XAUT ($293M) and PAXG ($205M) exceed this proposed threshold.
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Holder analysis via Arkham Intelligence shows PAXG with a healthy distribution (top 10 wallets hold 34% of supply) while XAUT is significantly more concentrated. Tether Treasury holds 148,048 XAUT (20.9%, $688M). Abraxas Capital is the largest institutional holder at approximately 86,947 XAUT across multiple wallets (12.3%, $400M). Antalpha holds 51,199 XAUT (7.2%, $238M) across several addresses. Two large individual wallets, one Arkham-linked to Bitfinex (0x785, 38,950 XAUT, $181M) and one accumulated via Bitfinex transfers (0xf9b3, 38,184 XAUT, $177M), each hold over 5% of supply. Exchange cold wallets (OKX, Bitfinex, Bybit, Bitget) and DeFi allocations (Aave $100M, Morpho $11M) account for additional concentration. The top 10 non-exchange, non-issuer holders control over 40% of circulating supply, posing direct counterparty risk: a single large holder liquidating could temporarily dislocate XAUT spot markets and widen the basis. Position sizing on XAUT should account for this tail risk.
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PAXG is the stronger candidate for near-term onboarding given its NYDFS regulation, monthly attestations, tighter spreads (0.05–0.15%), deeper Deribit options market, and lower fee structure. XAUT should be approved and placed on a monitoring track to ensure sustained OI data.
2. Gold Market Context
Understanding the macro gold environment is critical for evaluating basis trade viability, as tokenized gold derivatives are ultimately driven, during functioning tokenization markets, by the same forces that move physical gold markets.
The gold rally has been driven by dollar weakness, escalating geopolitical tensions, and persistent central bank buying. The 20%+ correction from ATH to mid-March levels is significant for basis trade analysis: it demonstrates the kind of volatility regime that tokenized gold derivatives must withstand. Notably, XAUT derivatives volume hit elevated levels (~$900M peak daily) during this correction period, suggesting robust two-way flow even in drawdown environments.
2.1 Tokenized Gold Market Structure
As of April 2026, the tokenized gold market has surpassed $6B in combined market capitalization, with XAUT and PAXG together representing approximately 96–97% of the sector:
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XAUT: ~$3.7B market cap
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PAXG: ~$2.3B market cap (on-chain market cap $2.3B per Etherscan, April 2, 2026)
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Others (Kinesis, DigixDAO, etc.): <$200M combined, negligible for basis trade consideration
This concentration in two assets is both an advantage as it provides deep liquidity in the dominant pair.
2.2 Tokenized Gold Market Growth (2020–2026)
The tokenized gold sector has grown from under $100M in 2020 to over $6B in 2026, driven by rising gold prices, institutional adoption, and improved exchange infrastructure:
| Year | Gold (XAU/USD) | PAXG Year-End | XAUT Year-End | Tokenized Gold Total Mkt Cap |
|---|---|---|---|---|
| 2020 | $1,898 | $1,938 | $1,590 | <$100M |
| 2021 | $1,829 | $1,831 | $1,828 | ~$200M |
| 2022 | $1,824 | $1,817 | $1,828 | ~$400M |
| 2023 | $2,063 | $2,024 | $2,060 | ~$1.0B |
| 2024 | $2,625 | $2,631 | $2,637 | ~$1.6B |
| 2025 | $4,328 | $4,328 | $4,325 | ~$4.4B (+177% YoY) |
| Mar 2026 | ~$4,666 | ~$4,666 | ~$4,646 | >$6.0B (+36% YTD) |
Source: CoinGecko market cap API (PAXG, XAUT, PMGT, CACHE); DefiLlama TVL tracker. Data as of April 2, 2026.
Both PAXG and XAUT track spot gold closely across all years, with sub-1% deviations at year-end. Intraday deviations can be larger: during periods of extreme gold volatility (such as the April 2025 tariff-driven selloff), PAXG deviated up to 1.5-2.0% from spot gold before arbitrageurs closed the gap within hours. XAUT has shown similar intraday dislocations of 1.0-2.5%, particularly around the March 26 Binance listing when temporary supply-demand imbalances emerged. These intraday deviations represent both a risk (temporary mark-to-market loss on the basis trade) and an opportunity (entry/exit timing for position management). The 177% sector growth in 2025 was driven by gold’s 64% price appreciation combined with $2.8B in net new inflows, which outpaced most other RWA categories. In 2025, tokenized gold recorded ~$178B in trading volume, surpassing five major gold ETFs combined and ranking as the second-largest gold investment vehicle by volume, behind only SPDR Gold Shares (GLD).
2.3 Structural Gold Demand Drivers
The viability of a gold basis trade depends on structural demand for gold futures from participants who are willing to pay a premium (positive funding rate) for leveraged long exposure. Central banks, sovereign wealth funds, and institutional allocators increasingly use futures and perpetual swaps to gain gold exposure without physical custody logistics. Retail traders in gold-bullish markets also maintain persistent long bias. This structural demand from real hedgers and speculative longs creates the funding rate premium that Ethena would capture on the short side of the basis trade.
Source: Laevitas. Aggregate OI from Ethena-eligible exchanges only. Oct 2025 to April 2, 2026. PAXG: $205M, XAUT: $293M.
Understanding who is driving gold demand is critical for assessing the sustainability of the gold basis trade. Three structural buyers dominate the market:
A. Central Bank Purchases (2022–2025)
| Year | Total (t) | #1 Buyer | #2 Buyer | #3 Buyer | Context |
|---|---|---|---|---|---|
| 2022 | 1,082t | Turkey (148t) | China (62t) | Egypt (47t) | Post-sanctions surge; Russia reserves frozen |
| 2023 | 1,037t | China (225t) | Poland (130t) | Singapore (77t) | De-dollarization acceleration |
| 2024 | 1,045t | Poland (90t) | Turkey (75t) | India (73t) | Third consecutive >1,000t year (vs. 473t avg 2010–2021) |
| 2025 | 863t | Poland (83t) | Azerbaijan (38t) | Kazakhstan (41t) | Elevated but below 2022–2024 pace; 95% of CBs plan to expand reserves (WGC survey) |
Central banks purchased over 4,000 tonnes of gold from 2022 to 2025, more than double the 2010–2021 annual average of 473 tonnes. This structural shift, driven by de-dollarization and sanctions risk, creates sustained physical demand that supports gold prices and, by extension, tokenized gold basis trade economics. It is worth noting that the pace of de-dollarization has moderated in recent weeks, with some central banks slowing purchases amid gold price consolidation above $4,500. Persistent inflation remains a parallel driver: with global CPI readings still above central bank targets in many economies, gold continues to attract flows as an inflation hedge, reinforcing the structural long bias that underpins positive funding rates.
Source: World Gold Council, Central Bank Gold Reserves by Country (2015–2024). Cumulative additions in metric tonnes; BRICs bloc includes China, Russia, India, UAE, Saudi Arabia, and Turkey.
Source: World Gold Council (central bank purchases, tonnes); US Treasury TIC data (China US Treasury holdings, $B). Annual 2015–2025. Shows structural rotation from US Treasuries to gold as reserve asset.
Continued in Part 2: Remaining demand drivers, asset profiles, and spot market analysis.
