The monetization of gold is further entering the encrypted lending market. Aave's previous cap of $25 million for XAUT was fully spent and the new amount was absorbed within 24 hours. At the same time, Arch Lending has begun to accept PAXG and XAUT as collateral for the loan, with a maximum value of 75%.

This means that users who hold token gold no longer simply follow the price of the gold passively, but also begin to use such assets for the acquisition of chain liquidity. In the absence of a gold convertible, borrowers can obtain cash or stable currency through collateral.

Aave, there was a concentrated loan.

According to Chaos Labs' earlier assessment, in January this year, in the XAUT market, Aave’s debt ceiling of $25 million was touched, indicating that there is a real need for the market to borrow in token gold. However, the market was also concentrated, with the largest single warehouse holding more than 75 per cent of all XAUT mortgaged debt.

Aave uses a more cautious parameter setting for XAUT. Under initial conditions, the user may borrow up to 70 per cent of the collateral value and 75 per cent of the liquidation line. At the same time, XAUT is placed in the settlement mode, which can only serve as collateral and can no longer lend more volatile assets.

According to the report, Aave's recent Ether Workshop v3 reserve page shows that approximately $70 million XAUT is deposited on the platform, but currently there is no outstanding debt supported by XAUT. This means that the January data are more appropriate to be seen as a historical demand signal than a picture of the current loan balance.

Arch, two new gold token mortgages. Paragraph

Arch Lending indicates that there is support for PAXG and XAUT as collateral for loans up to 75% of LTV. The mortgage token will be hosted by the Angelage Digital.

According to the company, the collateral of the borrower would not be re-committed or loaned to third parties. Its website disclosed that the assets in question were stored in anachorage in an isolated purse; in the event of a decline in the health of the loan, the platform would be partially liquidated and only part of the assets needed to restore the warehouse would be sold.

However, the support assets currently displayed on Arch's public website are still mainly BTC, ETH and SOL, with a maximum LTV of 60 per cent for established loans. As a result, PAXG, XAUT and 75% of the LTV information came from the latest product description provided by the company.

Some of these services are available on the market. Nexo states that eligible customers can borrow PAXG or XAUT; Youhodler and CoinRabbit also provide PAXG-related products. Ledn announced the launch of the XAUT mortgage in June this year, but stated that the service would open later in 2026.

Keep the gold open, but the risk is not gone.

The attraction of tokenized gold is that users can obtain liquidity without selling assets. Unlike sales, mortgage borrowing does not immediately end the gold hold. Since the assets themselves are on the chain, the users are not required to process the physical gold trans-shipment and additional custody arrangements.

The current combined market value of the two gold coins is approximately $5.2 billion. Among them, Tether Network showed on 28 August that the market value of XAUT was approximately $3.27 billion; CoinGecko data showed that PAXG had a market value of about $1.93 billion. Both are linked to in-kind gold, but distribution is not the same as the legal structure.

The report also warns that monetization does not eliminate leverage risk. Borrowers still have to face the risks associated with interest, liquidation, trusteeship and issuer. Even if the price of gold is usually smaller than that of TTs, the relevant tokens are still subject to foreclosure clauses, smart contracts and hosting arrangements.

Bitcoin and monetized gold are not a substitute for collateral properties. Bitcoin is more mature in its liquidity in the encrypted market, while gold coins offer another option for borrowers who wish to reduce price volatility. As more platforms open to relevant products, tokenization of gold is shifting from a simple price mapping tool to a collateral asset that supports encrypted primary mobility.