As the market declines, the latest crypto boom is centered around gold

Safe Havens in Traditional and Decentralized Finance

In conventional financial markets, it's widely accepted that investors flock to safe-haven assets such as gold during periods of economic uncertainty. These assets typically have little to no correlation with equities and other high-risk investments, offering a buffer for portfolios when volatility strikes. However, for a long time, decentralized finance (DeFi) lacked similar protective options. When markets tumbled, DeFi participants often had no choice but to retreat into stablecoins and wait out the storm.

DeFi’s Response to Market Turbulence

The cryptocurrency market experienced a dramatic downturn on October 10, 2025, with over $19 billion in long positions liquidated within a single day. Since then, market conditions have remained challenging. As expected, stablecoins absorbed much of the market’s liquidity, with their total capitalization rising by 2% to surpass $303 billion between late September and November 18. Yet, this increase was less pronounced than anticipated, largely because DeFi traders now have additional avenues to manage risk during sell-offs.

Between October 9 and October 13, the broader crypto and DeFi sectors contracted by roughly 11%. In contrast, on-chain commodities—a sector less than a year old—grew by about 5%. The momentum was even more striking over the longer term, with on-chain commodities climbing 27% in October alone. The primary driver behind this surge was a remarkable uptick in demand for tokenized gold.

Gold’s Digital Transformation

During this period, data indicates that the market value of on-chain gold expanded from $2.4 billion to over $2.6 billion, as measured by assets like Tether Gold, Paxos Gold, Matrixdock Gold, and WisdomTree Gold Token. Since the start of 2025, the total value of tokenized gold has soared from $1 billion to more than $3 billion, reflecting the asset’s growing appeal within DeFi.

This enthusiasm for gold is mirrored in the global market, where the price of a troy ounce has skyrocketed from $2,624.49 at the beginning of the year to $4,065.81 by November 18. Heightened geopolitical tensions and a weakening U.S. dollar have fueled a surge in gold purchases, particularly among central banks in Asia.

The trend is catching on among DeFi investors as well. Despite their reputation for embracing high-risk, speculative assets, many are now turning to gold as a means of stabilizing their portfolios. As the broader crypto market declines, tokenized gold is bucking the trend, with long-term Web3 participants helping to reduce volatility—much like traditional investors have done for generations. This shift marks a positive development for the DeFi ecosystem.

On-Chain Gold: A Game Changer for DeFi

The rapid growth of on-chain gold is more significant than many analysts realize. It signals that DeFi participants are committed to staying engaged in the space, even during downturns. By acquiring assets that can help smooth out the sector’s notorious volatility, investors are better equipped to weather market storms. This is a major breakthrough for DeFi, which has long struggled with liquidity challenges.

The Rise of Tokenized Real World Assets

The tokenization of gold and other real-world assets (RWAs) is fueling the expansion of the DeFi ecosystem. Since the beginning of the year, the DeFi RWA sector has grown by 132%, jumping from $7.09 billion to $16.42 billion by November 18. In comparison, the overall DeFi market saw a more modest increase of 4.5% over the same period, rising from $115.89 billion to $121.07 billion.

But the true innovation isn’t just in making these assets digital. While real-time pricing and transparency are valuable, the real potential lies in what can be done with these assets on-chain. As DeFi evolves, new opportunities will emerge to use these assets in ways that traditional finance cannot match.

For example, owning a company share in traditional finance simply means holding that share. In DeFi, however, providing liquidity to a protocol like Curve grants you an LP (liquidity provider) token, which can be utilized in a variety of ways, such as:

• Using LP tokens as collateral for borrowing or lending, depending on the platform
• Employing them in yield farming strategies
• Managing liquidity for protocols
• Serving as assets for protocol treasuries and yield optimization

Soon, similar flexibility will extend to on-chain commodities, enabling investors to generate yield, lend, borrow, and more—all with assets traditionally considered among the safest in the world.

Institutional Interest and the Future of DeFi

These developments present compelling opportunities, especially in today’s uncertain markets. It’s no wonder that major institutions like BlackRock and Franklin Templeton are increasingly active in DeFi, with a particular focus on RWAs.

Looking ahead, we may see stablecoins backed by real-world assets, offering protection against currency depreciation. This is especially relevant as nearly all current stablecoins are pegged to the U.S. dollar, a currency facing ongoing devaluation.

DeFi represents the next evolution in finance. While some prominent banking leaders may publicly criticize it, many are quietly investing behind the scenes. The data speaks for itself: DeFi is opening up new possibilities for assets like gold, allowing them to play a more dynamic role in wealth creation—opportunities that simply don’t exist in traditional markets. Through tokenization, gold is poised to become an even more integral part of the global financial landscape.