Institutional Shift to Tokenized Gold and Silver Gains Momentum Amid Market Volatility

When HSBC launched its distributed ledger gold platform, and J.P. Morgan implemented cross-border collateral settlement of tokenized gold bars through the Onyx network, the restructuring of underlying assets initiated by traditional financial giants had already begun. This trend has been most directly validated in the capital markets: Ondo Finance (SLVon) has received significant investment from Peter Thiel's Founders Fund and Coinbase Ventures; while PAXG, through deep compliance cooperation with PayPal and Mastercard, has directly introduced the trust of traditional payment systems into the digital asset domain.

This article uses recent precious metals market trends as a sample to explain why institutions are increasingly preferring tokenized assets.

As of February 2026, the global gold and silver markets are undergoing a stress test. After the gold price reached a peak of 5,600 U.S. dollars at the end of January, the market experienced a brutal long squeeze due to the continuous hawkish statements from hawkish officials at the Federal Reserve. As of yesterday (February 5), after a rebound yesterday, the spot gold price has once again fallen into high-level consolidation, currently retreating to around 4,980 U.S. dollars, failing to hold above the 5,000 U.S. dollar level; the silver price has also been volatile, currently at 86.5 U.S. dollars.

This price correction of a vertical drop followed by a rebound has become the best testing ground for RWA assets. It not only tests investors' holding endurance, but more directly reveals how on-chain investments supported by giants can fundamentally enhance capital control, enabling professional investors to have disposal efficiency surpassing traditional physical assets in extreme market conditions.

In traditional physical or paper gold trading, price corrections are often accompanied by severe liquidity lags. First, there is the dual limitation of time and space in trading: repurchase of physical gold is usually restricted by business hours and physical geographical locations. Even with gold ETFs, they cannot cope with selling waves triggered by macro news such as Kevin Warsh being nominated as Federal Reserve Chair during weekends or non-trading hours.

Secondly, two-way cost erosion is particularly significant during volatile periods. In traditional channels, repurchase premiums often asymmetrically expand when prices fall, causing investors to not only bear paper losses but also pay higher liquidation spreads. Combined with the T+n settlement system in traditional financial systems, this greatly restricts the rapid reallocation of capital across asset classes. In contrast, precious metal assets under the Web3 architecture provide 24/7 immediate settlement capabilities, and this liquidity holds extremely high risk-avoidance value during market corrections.

Through research on current mainstream RWA projects, we can categorize on-chain precious metals into three complementary investment tracks based on their underlying architecture and functional attributes, and explore their generational advantages over traditional models.

Category A: Digital forms of physical holdings (PAXG, XAUt, CGO)

The core logic of this track is to securitize physical asset ownership through blockchain technology. Its advantages are first reflected in extremely low operational barriers and asset flexibility. Compared to the typical 3%-5% physical premium and high transportation and insurance costs faced in physical gold trading, on-chain assets significantly reduce friction costs.

• Quantitative Support: Taking Comtech Gold (CGO) as an example, it supports investments starting from 1 gram (approximately $160), whereas the standard entry threshold for institutional vaults is typically 12.4 kilograms (a single ingot delivery note). According to data from January 2026, PAXG's 24-hour trading volume surged to $1.2 billion during periods of gold price volatility, demonstrating the real demand from institutions to utilize on-chain assets for "second-level repositioning" during extreme volatility.
• Audit Premium: On-chain proof (Proof of Reserve) transforms the quarterly sampling audits of traditional finance into logical verification every minute. PAXG, combined with real-time reserve data provided by Chainlink oracles, keeps its premium and discount in the secondary market stably within ±0.1% for the long term, far surpassing the 2% bid-ask spread fluctuation in physical markets during panic periods.

Category B: Tokenized Securitization Products (SLVon)

As a on-chain mapping of traditional compliant financial products, SLVon (launched by Ondo Finance) demonstrates dimension suppression in cross-market arbitrage and risk hedging. Its strategic value lies in introducing the stability of traditional securities assets into 24-hour cryptocurrency trading logic.

• Quantitative Support: In early February 2026, when the price of silver unexpectedly plummeted during a U.S. stock market holiday, the turnover rate (Turnover Rate) of SLVon on the blockchain reached 45% of its total supply, while holders of the traditional iShares Silver Trust (SLV) could only passively wait for the U.S. stock market to open.
• Efficiency comparison: Traditional ETF settlement cycles are T+1 or T+2, while SLVon built on Solana or Ethereum's underlying infrastructure achieves instant settlement functionality. This means that after investors sell their silver shares, the funds can immediately be invested into DeFi protocols to capture short-term volatility opportunities of over 15%, with capital turnover efficiency more than 50 times higher than traditional brokerage accounts.

Category C: Interest-bearing and High-efficiency Collaborative Assets (KAG, XAUm)

This track completely ended the history of zero returns from precious metals, transforming them into productive assets that can generate cash flow. During market corrections, this characteristic of positive returns became a cushion to hedge against falling cryptocurrency prices.

• Quantifiable support: The fee-sharing model adopted by Kinesis Silver (KAG) provides token holders with an average annual yield of 1.8% - 3.2% in 2025, which not only covers the cost of holding gold but also achieves asset appreciation.
• Capital Reuse Rate: Matrixdock (XAUm) Matrixdock (XAUm) demonstrates more significant data performance. During this period of dramatic gold price fluctuations, XAUm's loan-to-value (LTV) ratio has remained at a stable level of 85%. This means that holders can lend out stablecoins for liquidity mining with a yield of over 10% without selling their gold positions. This strategy enables the portfolio's internal rate of return (IRR) to maintain positive growth even during price corrections, demonstrating the depth of collaboration of RWA assets under extreme market conditions.

The market correction at the beginning of 2026 once again proved that the right to dispose of assets is as important as ownership. The true value of on-chain assets lies in the fact that they provide immediate risk hedging during price declines, asset productivity during sideways price movements, and a seamless profit-taking channel during price increases.

For operators committed to building professional market analysis pages, emphasizing asset liquidity efficiency rather than mere price prediction will be the core logic for establishing professional barriers. The current price pullback is providing a window to observe the liquidity performance of different on-chain metal projects under extreme stress tests, which is of significant reference value for establishing long-term, stable asset allocation strategies.