Concentration of Top Holders Results in Limited Supply of Leading Gold Tokens in Open Market

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In recent months, the value of an ounce of gold has surged by 3.8% in relation to the U.S. dollar. Within the realm of cryptocurrencies, two prominent tokens backed by gold have emerged: pax gold (PAXG) and tether gold (XAUT). These tokens combined hold a significant value of almost $1 billion. However, despite there being nearly 500,000 PAXG and XAUT tokens in circulation, their distribution remains relatively concentrated among just 31,000 token holders.

Although the supply of gold-backed tokens is substantial, it is worth noting that a mere 20 wallets control the majority of these tokens. The dominance of these wallets is a characteristic feature in the field of precious metal-based digital currencies. The demand for gold-backed tokens experienced a significant surge in 2022, particularly when the price of gold reached its all-time high of $2,074.60 per ounce on March 8th.

An example that highlights this concentration is PAXG, which witnessed its market value soar from $424 million on February 19, 2022, to $611 million by the end of March. Tether gold also exhibited growth during the same period, with its market capitalization increasing from $430 million in February 2022 to $486 million in March, marking a rise of more than 13%. The combined market capitalization of PAXG and XAUT on March 23, 2022, amounted to $1.09 billion.

However, as of July 18, 2023, the combined market capitalization of both gold-backed tokens has decreased, with PAXG valued at $490 million and XAUT at $487 million. In terms of trading volume, PAXG recorded approximately $16.38 million in global trade volume in the past day, while XAUT witnessed $4.17 million in trading activity.

Statistics reveal that there are approximately 31,000 holders of PAXG and XAUT combined, with 30,314 wallets specifically holding PAXG. On the other hand, tether gold is held by only 1,037 unique addresses. Notably, the top ten addresses for XAUT control a significant 98.23% of the total supply. The largest wallet for tether gold contains 93,500 XAUT, while the Tether Treasury possesses 66,679 tokens.

Regarding PAXG, the top ten addresses account for 34.13% of the entire supply among the 30,000+ wallets. Binance holds the largest wallet with 20,000 PAXG tokens, followed by the Paxos Treasury with 15,235 PAXG. Binance also possesses another wallet within the top ten, containing 5,833 PAXG, while Kraken holds 5,810 PAXG in the wallet just below Binance’s.

Determining the exact availability of these gold tokens for retail traders in the open market is challenging. In the past, both PAXG and XAUT have experienced premiums and discounts on exchanges compared to the spot market value of gold. Overall, the prices of these coins have generally closely mirrored the spot value of an ounce of gold since their issuance. Similarly, tether gold tokens exhibit minimal transfers, resembling the characteristics of their physical counterparts.

XAUT has only witnessed a total of 13,654 transfers since its creation, while PAXG has seen a significantly higher number of transfers, reaching 846,887 since its inception. However, when compared to the daily transfer activity of Ethereum and Bitcoin, PAXG’s transfers appear relatively minor.

The concentration of supply among the top holders of the leading gold-backed tokens raises questions about the accessibility of these tokens in the open market. Share your thoughts and opinions on this subject in the comments section below.

Frequently Asked Questions (FAQs) about Gold-backed tokens

More about Gold-backed tokens

• PAX Gold (PAXG) Official Website
• Tether Gold (XAUT) Official Website
• Market Capitalization of PAXG and XAUT
• Concentration of Token Holders in PAXG and XAUT
• Cryptocurrency Trading Volume