Cryptocurrency exchange Bybit has launched a tokenized yield gold product that allows users to earn interest on Tether Gold (XAUT), the latest entrant in a broader initiative to transform traditionally non-yielding assets into income-generating instruments.
The product is designed to convert tokenized gold – typically a passive store of value – into a yield-generating asset using XAUT, the largest tokenized gold productthe company announced Thursday. It allows its holders to earn passive income while maintaining exposure to gold prices.
Bybit said the offering was part of its broader expansion into tokenized real-world assets (RWA), as it goes beyond traditional crypto trading products.
While earning yield on tokenized assets is nothing new, extending the model to gold is gaining traction across the industry, highlighting efforts to further financialize real-world assets along the lines of blockchain.
Earlier this week, tokenization platform Theo unveiled a $100 million structured investment facility supporting its yield-bearing gold-linked stablecoin, thUSD. The model involves purchasing tokenized gold while hedging price risk by shorting gold futures, with the aim of generating returns from funding market spreads and derivatives rather than outright price movements.
Related: Tether Expands Support for USDT and Tether Gold in Opera’s MiniPay Wallet
Gold experiences extreme volatility after hitting record highs
After a historic rally that pushed the price of gold above $5,500 per troy ounce, the yellow metal has seen significant volatility in recent months, reflecting a changing macroeconomic backdrop.
Although gold is widely seen as a hedge against risk, especially during geopolitical shocks such as $100 a barrel oil and the ongoing war in Iran, prices have fallen about $1,000 from their peak. The decline comes as investors lower their expectations for Federal Reserve rate cutwhile rising real yields and a strengthening US dollar weigh on the metal.
Analysts also point to crowded positioning. In January, as bullion prices neared their peak, Bank of America’s survey of global fund managers identified long gold as the busiest trade on the markets.
Gold’s premium to its long-term trend also reached its highest level since 1980, according to Bloomberg.
Nevertheless, tokenized commodities continue to gain ground. Cointelegraph reported that the the market has exceeded 6 billion dollars in February, largely thanks to gold’s historic rally.
Related: Tokenized Gold Boosts Weekend Price Signals as CME Futures Close
