Summary

Tokenization is redefining asset ownership, accessibility, and trading in financial markets. As tokenization progresses, it has the potential to unlock tremendous value in the commodities sector, empowering a wider range of investors to participate in markets that can offer both resilience and growth potential. The tokenized commodities industry is young and rapidly expanding, with a market size of ~$1.3 billion as of November 2024 and YoY growth of ~25%.

By creating digital tokens that represent physical assets such as precious metals, energy commodities, and agricultural products, issuers have the potential to create broader investment access and market participation. This approach could introduce greater liquidity and transparency, enabling assets to be traded more freely on blockchain networks while reducing dependence on intermediaries. Fractional ownership allows investors to diversify their portfolios with digital real-world assets, leveraging the efficiency of blockchain technology.

Pointsville serves as an end-to-end alternative asset platform, designed to unlock value from real-world assets through digitization. Pointsville’s technology allows institutions to seamlessly integrate tokenized assets into their operations, expanding distribution channels, enhancing liquidity for illiquid assets, and unlocking new value from diverse asset classes.

Background

The shift towards tokenized assets is reshaping the financial landscape, particularly within the commodities sectors. Tokenization allows traditional assets—such as precious metals, energy commodities, and agricultural products—to be divided into digital tokens that represent ownership. This new approach enables broader market access, enhanced liquidity, and real-time trading capabilities on blockchain networks, a structure that was previously limited to specific financial institutions and high-net-worth investors.

Global demand for alternative assets is increasing rapidly, driven by investors seeking diversification and stability in uncertain economic environments. Tokenized commodities provide a bridge between physical assets and digital finance, offering investors secure, divisible ownership in real assets. In leveraging blockchain technology, tokenized commodities provide enhanced transparency by recording every transaction on an immutable public ledger, ensuring security through decentralized validation, and improving efficiency through faster, lower-cost transactions without the need for intermediaries. Pointsville’s platform supports these transitions by providing a unified framework for tokenized asset issuance and management, designed to integrate seamlessly with existing financial structures.

Sources: CoinMarketCap, CoinGecko, World Gold Council

Main Drivers for Change

1. Demand for Diversification and Stability
With global markets increasingly impacted by economic and geopolitical uncertainty, there is a growing demand for alternative investment options. Commodities offer an alternative investment vehicle to traditional bonds and equities. Some commodities can act as a store of value or serve as a hedge against volatility in traditional markets. Tokenization democratizes access to these assets, which are now available at a fraction of the cost, allowing retail investors to participate alongside institutions. An example of this is Tether Gold ($XAUT) which sees over $6mm in daily trading volume, as of November 2024.

2. Rapid Settlement and Operational Efficiency
Blockchain technology has introduced new levels of transparency, security, and efficiency in asset management. Tokenized assets are recorded on immutable ledgers, reducing reliance on intermediaries and enabling faster, cost-effective transactions. For example, commodity ETF’s are usually settled in one business day (T+1) whereas gold backed stable coins like $XAUT are settled instantaneously or within couple of minutes. Pointsville’s multi-chain architecture provides institutions with flexible, scalable solutions to manage these digital assets, making it easier for both large institutions and individual investors to access and trade these commodities, with settlement in real-time 24/7/365.

3. Growing Institutional and Retail Interest in Real-World Asset (RWA) Tokenization
Tokenization platforms are gaining traction among institutions that want to manage assets digitally while still retaining exposure to tangible, real-world assets. Pointsville’s platform supports commodity-backed tokens, enabling banks, investment funds, and retail investors to engage with assets like gold, oil, and agricultural products in ways that enhance liquidity and expand market accessibility.

4. Enhanced Financial Inclusion
Tokenization allows fractional ownership, which makes trading logistically easier for retail investors thus lowering the barrier to entry for individual investors to own assets that were previously out of reach. By enabling retail participation in assets like precious metals and agricultural commodities, tokenization supports a more inclusive financial system, extending investment opportunities to a wider audience.

The Technology Behind Tokenized Capital Markets

Asset digitization platform designed for tokenizing commodities to create more efficient capital markets

Pointsville Technology Platform

Our software revolutionizes traditional capital markets by facilitating seamless and secure issuance, trading, and settlement of tokenized assets.

Advanced Integration
Our white-label software platform is integrated with several leading blockchains, allowing for agile implementation. Pointsville’s multi-chain architecture means seamless interoperability, enabling issuers a high level of customization in applying specific requirements. This flexibility empowers issuers to tailor their offerings to meet their regulatory and market needs, further enhancing utility.

Pointsville’s commodities token issuance platform provides our financial partners with a significant advancement from conventional sovereign debt issuance methods, helping them to eliminate intermediaries and reduce costs while increasing efficiency and transparency.

New Capital Markets with Tokenized Commodities
Tokenizing commodities enables institutions, exchanges, and governments to create more transparent and efficient capital markets by transforming traditionally illiquid assets into accessible, tradable forms. With tokenized commodities, institutions can unlock capital for critical projects and drive sustainable growth in both established and emerging markets. By digitizing real-world assets, Pointsville empowers partners to build diversified ecosystems that attract global investors, stimulate economic development, and support long-term prosperity.

Tokenized Commodities: Other Potential Use Cases

The tokenization of gold is an early instance of the tokenization of commodities. Through Pointsville’s comprehensive software platform, our partners have the potential to implement the following use cases for tokenized commodities.

1. Precious & Industrial Metals
Tokenization of precious metals allows secure, divisible ownership of assets previously reserved for high-net-worth individuals and institutions. As of November 2024, gold tokens account for around 90% of all tokenized commodities, with a market capitalization of ~$1.17B.

In addition to gold tokens like Tether Gold and Pax Gold, tokenization could be applied to other precious metals such as silver, platinum and palladium whose combined annual market size is over $30 billion. This would also apply to industrial metals such as aluminum, copper and nickel.

This would enable investors to buy fractions of metal units, broadening access and offering a stable asset class within the digital finance ecosystem. The ability to trade precious metals 24/7 on blockchain networks enhances liquidity and provides a reliable store of value for both institutional and retail investors.

2. Oil and Energy Commodities
Tokenizing energy commodities, such as oil and natural gas, introduces new liquidity and democratizes access to traditionally exclusive markets. By removing intermediaries, Pointsville’s platform allows investors to hold fractional shares in energy reserves, reducing transaction costs and enhancing transparency. Additionally, tokenized carbon credits provide incentives for sustainable energy practices, allowing institutions to create and trade digital tokens representing emissions reductions.

Potential features of oil/energy tokens:

1. Tokenization of mineral rights: allowing landowners to sell the rights to oil beneath their land without giving up ownership of the land itself.
2. Royalty distribution: Oil companies lease these mineral rights and pay a share of their profits to the rights’ owners. For example, if an oil operator produces $1 million worth of oil in a month, they distribute 25% to the mineral rights’ owners.
3. Yield potential: A token issuer could offer a tokenized fund owning mineral rights on land operated by an oil & gas company, and offering a specified yield.

3. Agricultural Products
Tokenizing agricultural commodities, including crops, carbon credits, and livestock, supports transparency and traceability in the agricultural supply chain. With Pointsville’s infrastructure, investors can own fractional shares in agricultural products, making it easier for institutions to promote sustainable farming practices. Tokenized agricultural assets are ideal for socially responsible investors, enabling sustainable funding mechanisms for farms while providing a stable source of income through dividends or yield farming.

Potential features of agricultural tokens:

1. Tokenization of major crops such as soybeans, corn, wheat, coffee and sugar cane offer investors a new channel to access agricultural investments.
2. Each token would be backed by and represents one ton of grain, or similar unit.
3. Tokenization allows farmers to store, invest, and transact with their grain production, potentially removing intermediaries and reducing costs.
4. This can provide small and medium-sized farmers with access to new funding sources through tokenized assets.

4. Integration with Decentralized Finance (DeFi)
Pointsville’s platform can be integrated into DeFi networks, enabling new financial strategies, such as collateralized loans, yield farming, and asset-backed stablecoin issuance. Tokenized assets such as gold and oil offer an alternative form of collateral, making DeFi accessible to investors looking to diversify outside of crypto assets. This approach enhances portfolio diversification while providing liquidity and risk management options that were previously unavailable in traditional finance.

About Pointsville

Pointsville is an end-to-end alternative asset factory

We are your one-stop shop for loyalty, stablecoins and alternative asset digitization & management. 

Our software platforms bridge the gap between emerging digital financial technologies and traditional asset classes. Our technology supports our partners with tools to:

• Convert real-world assets into tokenized alternative assets
• Utilize the leading capital markets, regulatory, loyalty and blockchain technologies
• Empower your network with programmable loyalty, ownership, issuance and asset management tools
• Enable regulatory compliance and reporting for loyalty and alternative assets
• To learn more about our partners, click here