The tokenized commodity market is, for the most part, a gold market. As of October 8, 2026, RWA.xyz counted about $5.2 billion in tokenized commodities that can move freely onchain, and two gold tokens, Tether Gold (XAUT) and PAX Gold (PAXG), accounted for roughly $4.8 billion of it.
Demand explains part of that, since gold is an asset many people want to hold for years. Its physical properties explain much of the rest. Gold makes an issuer's job straightforward and crude oil makes it difficult, and the differences between them map closely onto what an oil-backed token has to prove. For readers new to real-world asset tokens, our primer on RWA tokens covers the basics.
Gold, the easy case
The wholesale gold market is built around a standard object, the London Good Delivery bar. Under the LBMA's Good Delivery Rules, a bar must contain between 350 and 430 fine troy ounces of gold, about 10.9 to 13.4 kilograms, at a fineness of at least 995 parts per thousand. That single specification makes bars fungible, so one can stand in for another without any dispute over quality.
Each bar also carries a serial number and a refiner's stamp, which allows it to be listed on a bar list and checked by an auditor. PAX Gold, for example, lets holders enter a wallet address and see the serial number, fineness and weight of the bar their tokens are allocated to, and Paxos publishes monthly attestation reports.
Gold does not evaporate, corrode or spoil, so a bar assayed today holds the same metal decades later. It is also dense in value. A bar roughly the size of a building brick holds several hundred ounces, so the cost of storing and insuring it is small relative to its worth.
A gold token is therefore largely an exercise in record-keeping. A vault holds numbered bars, an auditor checks them, and the issuer keeps token supply in line with the bar list. The token still depends on the vault and the auditor, but every claim resolves to a physical bar that can be inspected. The bullion market solved the difficult problems long before blockchains existed.
Oil, the hard case
A barrel of crude oil is not an object in the way a gold bar is. It is 42 gallons of liquid that must be held in something, whether a tank, a pipeline or a ship, and that creates five problems gold does not have.
Barrels are commingled. Oil moving through pipelines and storage hubs is usually blended with other oil of the same specification. At Cushing, Oklahoma, where NYMEX WTI futures are delivered, the exchange describes the deliverable “Domestic Common Stream” as a fungible blend of light sweet crudes from areas including the Permian, Bakken and Niobrara. An owner of oil in that system owns a quantity that meets a specification, not an identifiable barrel with a serial number.
Quality varies. Crude is graded mainly by density, expressed as API gravity, and by sulfur content. Light, low-sulfur crude generally sells for more because it is easier and cheaper to refine into gasoline and diesel. The NYMEX contract accepts domestic crude only with sulfur of 0.42% or less by weight and API gravity between 37 and 42 degrees. A barrel is therefore a meaningful unit only once its grade is known.
Volume is a measurement, not a count. Oil expands as it warms, so commercial volumes are corrected to a standard temperature, usually 60°F, using tables published by the American Petroleum Institute, and reported net of sediment and water. The same tank gauged on a cold morning and a hot afternoon gives different raw readings, so ownership records have to rely on the corrected figure.
Storage is limited at both ends. Tank capacity at a hub is fixed in the short run, and tanks cannot be drawn down past the minimum needed to keep them operating. In April 2020, with Cushing nearly full, the price of oil for delivery there briefly fell below zero. In June and July 2026, with Cushing inventories below 20 million barrels, EIA noted that they may be near tank bottom levels. The value of a barrel depends on where it is held and who has room for it.
Ownership is recorded on paper. Because oil cannot be engraved, title is evidenced by documents such as warehouse receipts, terminal and pipeline records, and transfer instruments. Article 7 of the Uniform Commercial Code governs documents of title, and Section 7-207 allows a warehouse to commingle fungible goods, which are then owned in common by the parties entitled to them. Proving that oil exists and is owned therefore means proving both that the paperwork is genuine, current and free of competing claims, and that the barrels it describes are actually in the tank.
A gold token is mostly a record-keeping problem. An oil token is a measurement, logistics and legal problem that also needs good record-keeping.
Forms of oil exposure
Because holding physical barrels is expensive and operationally demanding, most oil exposure is held on paper, and “oil” in a token's name can describe very different things.
Futures and futures funds. The benchmark NYMEX contract covers 1,000 barrels of WTI-type crude and expires monthly, so a fund seeking continuous exposure has to roll into later contracts. That roll costs money when later contracts are more expensive and earns money when they are cheaper, as Contango and Backwardation, Explained describes, so a futures fund's return can drift well away from the oil price.
Synthetic tokens and perpetual futures. These track an oil price through an oracle, a derivative structure or periodic funding payments between long and short positions. They provide price exposure, often with leverage, but they are contracts between traders and protocols with no barrels behind them.
Reserve-linked tokens. These are tied to oil still in the ground, through an interest in a field or its future production. Their value depends on geology, extraction costs, operators and the legal terms of the interest.
Inventory-backed tokens. These represent oil that has already been produced and is held in storage. They are the closest equivalent to a gold token and the only category that answers the question a gold token answers, namely where the commodity is and who owns it. They also inherit every physical problem described above.
Five tests for an oil token
An oil-backed token should be able to demonstrate five things.
- Existence and title. Evidence that specific volumes exist and are owned free of competing claims, with title documents held by an independent party.
- Supply discipline. An independent record of backing that anyone can compare with the token's onchain supply.
- Quality. A clear statement of what crude backs the token and how it is measured.
- Redemption. A defined exit, whether in cash or physical oil, with clear terms on eligibility, fees and who pays for delivery.
- Sourcing integrity. Sanctions screening of suppliers, because a barrel's origin cannot be seen in the oil itself.
WTIC in practice
WTIC, issued by Energy Substantiation, is a digital token backed by physical West Texas Intermediate crude held in inventory, at one barrel per token. The oil remains in tanks and pipelines that suppliers already operate, so holders pay no storage fee, and the rest of the structure is built around the five tests above.
Suppliers hold the oil as bailees and must keep it free of liens, pledges and competing claims. Ownership is recorded in Volumetric Energy Receipts, documents of title that convey an undivided interest in commingled oil. An independent custodian, High Ridge Trust, holds those receipts for token holders, confirms that the oil remains at approved locations, and publishes its own ledger of the receipts it holds, separately from the issuer. Anyone can compare that ledger with the token's total supply on Ethereum.
The backing is WTI-specification crude, with the underlying receipts recorded in energy content at 5.8 MMBtu per barrel. Eligible participants can redeem on U.S. business days for cash, and qualified holders can elect physical delivery at their own cost. Every participant completes KYC and AML checks, and Energy Substantiation does not buy commodities or accept energy receipts from countries or entities under U.S. or international sanctions, including those administered by OFAC.
The physical problem remains
Tokenization does not change what oil is. Barrels still sit in tanks, still need to be measured, and still depend on documents and the parties that hold them. WTIC's approach is to put each of those dependencies in writing, place the title documents with an independent custodian, and publish what can be checked. That makes the dependencies visible rather than removing them, and holders still rely on suppliers keeping the oil, on the custodian verifying it, and on the legal structure holding up if something goes wrong.
A gold token can lean on a bullion market that solved these problems long ago. An oil token has to solve them itself, and the clearest measure of any oil token is how openly it shows that work.
