Metal-Backed Tokens
asset type
Digitally Vaulted Bullion ÔÇö Metal-Backed Tokens
Metal-backed tokens are digital assets that represent direct ownership of physical precious metals ÔÇö most commonly gold or silver ÔÇö stored in audited vaults. Unlike synthetic assets that track price but have no underlying collateral, metal-backed tokens are fully reserved and redeemable. Each token typically corresponds to a specific weight of physical metal (e.g., 1 gram of gold or 1 ounce of silver).
Use Case: “Metal-backed tokens like $KAG and $KAU provide digital access to physical bullion, with the flexibility of crypto and the trust of vault-based reserves.”
Key Concepts: Redeemability, Vaulted Bullion, 1:1 Backing, Allocated Storage, Physical Delivery
Examples of Metal-Backed Tokens:
- $KAG ÔÇö Token backed 1:1 by one troy ounce of silver held in insured vaults, redeemable via the Kinesis platform
- $KAU ÔÇö Token backed 1:1 by one gram of gold with full audit and redemption capability
- $AUX ÔÇö Gold token offered by other vaulting providers (may or may not be redeemable)
- $XAUT ÔÇö Tether Gold, backed by gold reserves and issued by Tether; redeemability subject to terms
- $PAXG ÔÇö Paxos Gold, backed by allocated gold in Brinks vaults with legal ownership rights
Key Differences from Synthetic Assets:
- Backed by real metal stored in vaults, not derivatives or smart contract collateral
- Redeemable ÔÇö users can convert tokens into physical bars or coins (KYC required)
- Audit-verified reserves with legal ownership tied to each token