Perfolio is a gold-backed lending platform. You buy gold (XAUT, where each token equals exactly 1 ounce of real physical gold stored in Swiss vaults), then borrow digital dollars (USDT, each worth exactly $1, convertible to your local currency) against your gold. No credit checks needed. No monthly EMI payments. No repayment deadlines. Your gold stays yours throughout. When you repay the loan, you get your gold back. It works like a modern digital gold pawn shop, but without the middleman, the paperwork, or the fees.

Gold (XAUT) is a digital gold token issued by Tether (the same company behind USDT stablecoins). Each gold token (XAUT) represents exactly 1 troy ounce of real physical gold, stored in LBMA-certified vaults in Switzerland. The gold reserves are independently audited every quarter by BDO Italia. Unlike gold ETFs, gold (XAUT) is redeemable for actual physical gold bars. Think of it as a digital certificate of ownership for gold in a vault: you own the gold, XAUT is your proof.

How does borrowing work?

Borrowing on Perfolio works in four simple steps. First, you buy gold (XAUT tokens) through the Perfolio app using your bank transfer or existing digital dollars (USDT). Second, you deposit your gold (XAUT) into the lending vault; think of this as locking your gold as security. Third, you receive digital dollars (USDT, worth $1 each) instantly, up to 77% of your gold's value. Fourth, you convert those digital dollars to your local currency (Indian Rupees, UAE Dirhams, Euros, etc.) and withdraw to your bank account. Your gold remains safely locked in the vault throughout. When you repay the loan, your gold is returned to you.

What interest rate will I pay?

Perfolio charges a variable interest rate starting from approximately 3% per year (APR, or Annual Percentage Rate). This means if you borrow $1,000 for a full year, you would pay about $30 in interest. The rate is not fixed; it goes up or down based on supply and demand in the lending market. You can see your current rate at any time in your Perfolio dashboard. There are no fixed monthly payments; interest accrues daily on whatever amount you have borrowed.

Are there repayment deadlines?

No. There are no repayment deadlines, no EMIs (equated monthly installments), and no fixed repayment schedule. You repay on your own terms, partially or fully, whenever you choose. You could repay after one week, one month, or one year. The only ongoing cost is interest, which accrues daily on your outstanding loan balance. Your gold collateral is returned to you as soon as the full loan amount plus accrued interest is repaid.

Where is my gold stored?

Your gold (XAUT tokens) represents physical gold bars stored in LBMA-certified (London Bullion Market Association) vaults in Switzerland. These are professional-grade precious metals storage facilities, the same standard used by central banks and institutional investors. The gold is fully insured. Tether, the issuer of XAUT, publishes independently audited reserve reports every quarter, conducted by BDO Italia, confirming that every gold token (XAUT) in circulation is backed by a real ounce of physical gold.

What fees does Perfolio charge?

Perfolio charges interest only on the amount you have borrowed, nothing else. There are no origination fees (fees for creating the loan), no account maintenance fees, no deposit fees, no withdrawal fees, and no hidden charges of any kind. You pay interest daily on your outstanding loan balance at the variable market rate, which starts from approximately 3% APR. If you borrow $1,000 for 30 days at 3% APR, you pay roughly $2.50 in total interest.

Is the lending protocol secure?

Perfolio uses an independently audited smart contract as its lending infrastructure. It is a non-custodial lending protocol deployed on Ethereum, one of the most widely used and tested blockchain networks in the world. Non-custodial means no single company (including Perfolio) can access or freeze your funds. The protocol has been independently audited by multiple leading security firms and handles billions of dollars in assets. All transactions are recorded publicly on the Ethereum blockchain, meaning you can verify every deposit, loan, and repayment yourself.

Is Perfolio a cryptocurrency app?

No. Perfolio is a gold lending platform that uses blockchain technology under the hood, similar to how Uber uses GPS technology, but you don't need to understand GPS to take a ride. You interact with gold and money, not with cryptocurrency. The blockchain ensures your transactions are transparent, secure, and instant.

What is USDT and how do I use it?

USDT (Tether USD) is a digital currency worth exactly $1. Think of it as digital dollars that you can send anywhere instantly. When you borrow on Perfolio, you receive USDT. You can then convert USDT to your local currency (Indian Rupees, UAE Dirhams, Euros, British Pounds, and more) through Perfolio's licensed payment provider and withdraw to your bank account.

What does 'digital gold' mean?

Digital gold means you own a token that represents real physical gold stored in a vault. Instead of keeping gold bars at home or in a bank locker, you hold a digital certificate (XAUT token) that proves you own that gold. The advantage: you can buy fractional amounts (as little as $10 worth), trade 24/7, and use your gold as collateral for instant loans. These are things you can't do with physical gold.

How does the lending technology work?

Perfolio's loans are powered by an audited smart contract, which is automated banking software that runs on the Ethereum blockchain. Instead of a bank officer processing your loan (which takes days and involves paperwork), the smart contract processes it in seconds with no human intervention. The protocol has been independently audited by multiple leading security firms and handles billions of dollars in loans.

What is LTV (Loan-to-Value)?

LTV stands for Loan-to-Value ratio. It's how much you can borrow relative to your gold's value. Perfolio allows up to 77% LTV. Example: if your gold is worth $10,000, you can borrow up to $7,700. The remaining $2,300 acts as a safety buffer in case gold price drops. A lower LTV means a safer position.

What happens if gold price drops while I have a loan?

If gold price drops significantly, your loan may become under-collateralized (meaning your gold is no longer worth enough to back your loan). In this case, the lending protocol may automatically sell some of your gold to repay part of the loan. This is called liquidation. Perfolio shows your 'health factor' in real-time so you can take action before this happens: either add more gold collateral or repay part of your loan.

Do I need to understand blockchain or crypto to use Perfolio?

Not at all. Perfolio is designed for people who want to use gold as a financial tool, not for crypto experts. You buy gold, you borrow money, you repay when you want. The blockchain technology works in the background to make everything faster, cheaper, and more transparent, but you never need to interact with it directly.

Gold-Backed Stablecoins: A Complete Overview

Gold-backed tokens (sometimes called gold stablecoins) are crypto tokens fully backed by physical gold, where each token represents a fixed quantity of gold, typically one troy ounce. The two largest issuers are XAUT from Tether and PAXG from Paxos. Combined, the market holds roughly $1.5 to $2 billion in tokenized gold, making it the largest segment of real-world asset (RWA) crypto.

Are Gold-Backed Tokens Actually "Stable"?

The word "stablecoin" creates a common misconception. USD stablecoins like USDT and USDC are pegged to one US dollar and barely move in price. Gold-backed tokens are pegged to the gold price, which fluctuates daily. In 2024, gold rose more than 25%, so holders of XAUT or PAXG saw equivalent gains. You are not holding a stable dollar value; you are holding gold in tokenized form.

The word "stable" in this context means something narrower: your token tracks gold precisely. You will not suffer the kind of 50% drawdown common in Bitcoin or Ethereum. But if gold falls 10%, your token falls 10%. Think of gold-backed tokens as gold-pegged crypto, not dollar-pegged crypto.

This distinction matters enormously for anyone using these tokens as collateral, for cross-border savings, or for loan purposes. A platform like Perfolio that offers XAUT-backed loans prices your collateral against the live gold spot rate, not against a fixed dollar figure.

How Do Gold-Backed Tokens Work?

The mechanics follow a four-step cycle: custody, attestation, minting, and burning.

Custody: The issuer purchases and vaults physical gold, typically in LBMA-accredited Swiss or UK vaults. Each gold bar is assigned a serial number linked on-chain.
Attestation: An independent auditor (for example, Paxos uses Withum; Tether uses BF Borgers or equivalent) verifies that the physical gold reserves match the total token supply. Attestations are published regularly, usually monthly.
Minting: When a buyer deposits funds, the issuer acquires the corresponding gold and mints new tokens. One XAUT equals one fine troy ounce; one PAXG equals one fine troy ounce.
Burning: When a holder redeems, the issuer destroys (burns) the tokens and either ships physical gold or credits the equivalent in cash. XAUT requires a minimum of 50 troy ounces for physical redemption; PAXG requires approximately 430 troy ounces.

Token transfers happen on-chain in seconds. Settlement does not wait for banking hours, cross-border wire delays, or precious metals brokers. This speed is one of the core advantages over holding physical gold or gold ETFs.

As of early 2026, XAUT holds a market capitalisation of approximately $1 billion, making it the dominant gold-backed token globally. PAXG sits in the $500 million to $1 billion range. To understand the broader RWA context, read how gold tokenization works as an RWA primer.

Major Gold-Backed Token Issuers

Five issuers cover most of the tokenized gold market today.

XAUT (Tether Gold): Issued by Tether, the same company behind USDT. Each XAUT token is backed by one fine troy ounce of gold held in Swiss vaults. Available on Ethereum and Tron. No storage fees for token holders; fees are embedded in the mint and redeem spread. XAUT is the largest gold-backed token by market cap.

PAXG (Pax Gold): Issued by Paxos Trust Company, a New York-regulated trust. Each PAXG is backed by one fine troy ounce of LBMA-standard gold in Brinks vaults in London. Available on Ethereum. Paxos charges a 0.02% on-chain transfer fee and a 0.15% to 0.25% annual custody fee depending on holding size.

DGLD (Digital Gold): A smaller issuer backed by gold stored in Swiss vaults and custodied by Metaco. Trades on a smaller number of exchanges. Total supply is considerably smaller than XAUT and PAXG, making it less liquid.

Aurus AWG: Issued by Aurus, a fintech platform that partners with multiple refiners and vaulting providers. Each AWG token represents one gram of gold rather than one troy ounce, making it accessible at a lower price point (gold is approximately $3,200 per troy ounce as of early 2026, meaning AWG trades around $103 per gram). Available on Ethereum and other EVM chains.

Cache Gold (CGT): Each CGT represents one gram of gold stored in secured vaults audited by the LBMA. Cache Gold charges a 0.25% annual storage fee and allows physical delivery globally, distinguishing it from competitors with high redemption minimums.

Gold-Backed Tokens vs USD Stablecoins vs Gold ETFs

You have three main ways to get gold exposure or stable digital value. Each serves a different purpose.

USD stablecoins (USDT, USDC): The value stays at $1. You hold purchasing power in US dollar terms. Inflation erodes your real value over time. No gold exposure. Fast settlement, widely accepted across DeFi and exchanges.

Gold ETFs (GLD, IAU): You hold a share in a fund that owns physical gold. The price tracks gold. But you can only trade during stock exchange hours, settlement takes two business days (T+2), and you cannot use your ETF shares as collateral in a crypto lending platform. Annual management fees range from 0.10% to 0.40%.

Gold-backed tokens (XAUT, PAXG): You hold a token whose price tracks gold, with 24/7 on-chain transferability, near-instant settlement, and the ability to use your tokens as collateral on DeFi platforms or specialised lenders. The trade-off is issuer custody risk and crypto-specific regulatory uncertainty.

If you want to compare XAUT and PAXG specifically head-to-head, see the XAUT vs PAXG comparison for 2026.

What Are the Use Cases for Gold-Backed Tokens?

Four primary use cases drive demand for gold-backed tokens today.

Long-horizon savings: Holding XAUT or PAXG for years mirrors the traditional "buy gold, hold it, protect against inflation" strategy, but without storage costs, insurance premiums, or the need for a physical safe. Over the past 20 years, gold has returned roughly 8% per year in US dollar terms.

Lending collateral: Gold-backed tokens can be deposited as collateral on platforms that offer non-liquidating or low-liquidation loans. Perfolio, for example, lets you borrow against XAUT at up to 77% loan-to-value, receiving digital dollars (USDT) without selling your gold position. This is analogous to a traditional securities-backed loan but settles on-chain without credit checks or bank paperwork.

Cross-border value transfer: Sending $50,000 worth of gold across borders via a bank wire takes days and triggers multiple compliance checks. Sending 15 XAUT tokens takes seconds and settles directly in the recipient's wallet. This use case is particularly valuable for treasury management across geographies with currency controls.

Geopolitical insurance: During currency crises, gold-backed tokens allow residents of affected economies to hold an asset denominated in gold rather than a weakening local currency, accessible from any internet connection. Since tokens are held in self-custody wallets, they are harder for governments to freeze than domestic bank accounts holding gold ETFs.

What Are the Risks of Gold-Backed Tokens?

Gold-backed tokens carry risks that physical gold and gold ETFs do not.

Issuer custody risk: You trust the issuer to actually hold the gold they claim. If Tether or Paxos were to misrepresent their reserves, your token could become worthless. Attestation reports mitigate but do not eliminate this risk. Unlike a gold ETF regulated by the SEC, not all gold token issuers operate under equivalent regulatory supervision.

Peg deviation: In periods of extreme market stress or low liquidity, gold-backed token prices can trade at a slight discount or premium to the spot gold price. PAXG has historically maintained a very tight peg due to its institutional redemption program. XAUT has shown slightly wider spreads during volatile markets. Check the live token price against the gold spot price before large transactions.

Smart contract risk: The token contracts themselves can contain vulnerabilities. All major issuers have their contracts audited, but no audit guarantees zero bugs. If you are new to crypto, read up on what smart contracts are and how they function via the Perfolio glossary.

Regulatory risk: Regulatory classification of gold-backed tokens varies by jurisdiction. Some regulators treat them as securities, others as commodities, and others have no framework yet. A regulatory reclassification could restrict trading or require additional compliance steps from issuers. For a deeper look at how Tether Gold operates under the gold standard, see Perfolio's gold standard explainer.

Comparison Table: Major Gold-Backed Token Issuers

Token	Issuer	Network	1 Token Equals	Storage / Custody Fee	Audit Cadence	Approx. Market Cap
XAUT	Tether	Ethereum, Tron	1 fine troy oz gold	0% for holders (spread on mint/redeem)	Monthly attestation	~$1 billion
PAXG	Paxos Trust	Ethereum	1 fine troy oz gold	0.15% to 0.25% per year	Monthly attestation	~$500M to $1B
DGLD	OpenGold / Metaco	Bitcoin (sidechain)	1/10 fine troy oz gold	0.4% per year	Quarterly	<$50M
AWG	Aurus	Ethereum, EVM chains	1 gram gold	0.4% to 0.5% per year	Monthly	<$50M
CGT	Cache Gold	Ethereum	1 gram gold	0.25% per year	Monthly	<$30M

Physical redemption thresholds are material: XAUT requires a minimum of 50 troy ounces (worth roughly $160,000 at current gold prices) for physical gold delivery. PAXG requires approximately 430 troy ounces (roughly $1.4 million). Smaller holders typically exit by selling on a secondary market rather than redeeming with the issuer.

Frequently Asked Questions

Gold-to-stablecoin mint and burn mechanism flow diagram — Gold-backed stablecoins are minted when gold is deposited into the reserve and burned when the corresponding gold is redeemed.

What is a gold-backed stablecoin?

A gold-backed stablecoin, more accurately called a gold-backed token or gold-pegged crypto, is a crypto token where each unit is backed by a set quantity of physical gold held in a vault by the issuer. The token price tracks the gold price rather than the US dollar. XAUT and PAXG are the largest examples, each representing one troy ounce of gold.

Is a gold-backed token the same as a stablecoin?

Not exactly. Dollar stablecoins (USDT, USDC) maintain a $1 peg and do not gain value. Gold-backed tokens track gold prices, which rise and fall. The "stable" quality is that your token reliably tracks gold, not that the dollar value stays fixed. Gold-backed tokens are better understood as tokenized commodities than as stablecoins in the traditional sense.

Which is better, XAUT or PAXG?

XAUT has a larger market cap (roughly $1 billion) and no ongoing storage fee, but a higher physical redemption minimum of 50 troy ounces. PAXG charges a 0.15% to 0.25% annual custody fee but is issued by a New York-regulated trust company, which some institutions prefer. For a detailed comparison, see the XAUT vs PAXG comparison for 2026.

Can you earn yield on gold-backed tokens?

Gold itself does not produce yield, and most gold-backed tokens pay no interest by default. However, you can use tokens like XAUT as collateral to borrow digital dollars (USDT) without selling your gold. The borrowed USDT can then be deployed elsewhere. This is a yield-generating strategy without liquidating your gold position. Perfolio offers this through an XAUT-collateralised loan.

How are gold-backed tokens audited?

Major issuers publish monthly attestation reports from independent accounting firms. These reports confirm that the number of tokens in circulation matches the number of gold ounces or grams held in custody. Paxos (PAXG issuer) publishes attestations from Withum. Tether (XAUT issuer) publishes its own attestation programme. Attestation differs from a full financial audit; it verifies the reserve claim but not broader financial health of the issuer.

Are gold-backed tokens safe?

Gold-backed tokens carry issuer custody risk, smart contract risk, and regulatory risk that physical gold does not. They are not insured by the FDIC or any government deposit scheme. That said, major issuers like Paxos and Tether maintain independent audits and transparent reserves. You should treat them as you would any financial product requiring trust in a third-party custodian.

What is the total market cap of gold-backed tokens?

As of early 2026, the combined market capitalisation of all gold-backed tokens is approximately $1.5 billion to $2 billion. XAUT accounts for roughly $1 billion of that figure, with PAXG contributing most of the remainder. The total is small compared to the $500 billion-plus gold ETF market, suggesting significant room for growth as institutional adoption of tokenized assets increases.

Can you use gold-backed tokens as loan collateral?

Yes. XAUT in particular is widely accepted as collateral on crypto lending platforms. Perfolio specialises in gold-backed lending, allowing you to deposit XAUT and borrow digital dollars (USDT) at up to 77% loan-to-value without a credit check. The loan is secured by your gold. If you want to understand the full process, read what is XAUT: Tether Gold explained.