Token Terminal published a number in its latest research newsletter that briefly stops you in your tracks: tokenized commodities are a $5.3B sector — and over 90 % of that is two gold tokens. Tether's XAUT ($2.7B) and Paxos' PAXG ($2.3B) dominate so completely that the other 64 tracked tokens together come to just $293M.
Gold was the natural starting point. It's the historic inflation hedge, and the move above $5,000 per ounce in January 2026 reinforced demand for digitally tradable gold hedges. But the interesting story is now beyond it: silver, oil, and copper are coming on-chain — and they behave structurally differently than gold.
That's relevant for anyone who takes the commodity asset class seriously. And it has a few non-obvious consequences for backtesting that we'll get into.
The key outliers — and what they actually represent
Three Ondo Finance tokens dominate the non-gold space:
| Token | Underlying | Market cap (per Token Terminal) | What it tracks |
|---|---|---|---|
| SLVon | iShares Silver Trust (SLV) | $29.9M | physical silver |
| USOon | United States Oil Fund (USO) | $3.7M | oil futures (rolling) |
| COPXon | Global X Copper Miners ETF (COPX) | $1.8M | copper mining stocks |
Important — and often glossed over in crypto news coverage: these tokens don't track the commodity's spot price, they track the underlying U.S. ETF's price. That's a meaningful distinction, especially for USOon and COPXon.
- SLVon ≈ silver: SLV is backed by physical silver. Tracking error is minimal. Holding SLVon is economically close to holding silver.
- USOon ≠ oil spot: USO holds oil futures contracts that get rolled regularly. In a contango market — where far-dated futures are more expensive than near-dated — USO loses ground over time even if oil spot stays flat. Buying USOon thinking "I have oil exposure" actually means "I have oil exposure with roll-yield drag." Not wrong — just not the same.
- COPXon ≠ copper price: This is the largest discrepancy. COPX is an ETF on copper-mining equities — Freeport-McMoRan, Southern Copper, BHP, etc. These stocks correlate with the copper price but are also driven by extraction costs, energy prices, geopolitical risk in mining countries, and general equity-market volatility. COPXon is closer to a sector-equity bet than a pure commodity bet.
These distinctions aren't trivia. They change what you're actually backtesting when you apply a commodity strategy to these tokens.
What the data shows — and what it doesn't
Token Terminal highlights two observations that matter for traders:
Observation 1: silver growth is real. SLVon is up around 48 % YTD in market cap. That aligns with the macro picture — silver rallies alongside gold, driven by industrial demand (solar, EVs) plus safe-haven flows.
Observation 2: USOon mirrors geopolitics in near-real time. During the start of the Strait of Hormuz crisis in March 2026, USOon's weekly transfer volume jumped to over $100M. Volume began climbing when the U.S. and Israel launched airstrikes on Iran and peaked as oil approached $100 per barrel.
The second is actually the interesting story. It's the first solid evidence that tokenized commodities work as on-chain hedging vehicles for geopolitical shocks — faster than a traditional brokerage account, no weekend close, no KYC for users who already hold a wallet.
That's also the case for growth beyond gold. If 1 % of SLV's AUM (~$35.7B) flowed into SLVon, its market cap would reach ~$357M — roughly 10x current size. The reference ETFs give the sector a clear scale to grow against.
Why you can't (yet) backtest these tokens classically
This is where it gets technical — and relevant for our platform.
Problem 1: data history. SLVon, USOon, and COPXon all launched after Ondo Global Markets went live in September 2025. The oldest have less than 12 months of price history. That's methodologically too little for any serious backtest result. An RSI strategy on SLVon with 8 months of data is statistical noise, not signal.
Problem 2: trading-hours asymmetry. Ondo tokens trade their buy/sell function 24/5 (Mon 08:00 ET to Fri 19:59 ET), peer-to-peer transfers run 24/7. The underlying — SLV, USO, COPX — only trades on U.S. exchange hours, around 9:30–16:00 ET. That creates gaps where token price isn't directly calibratable to ETF price. Buying SLVon on a Saturday means buying against a synthetic price that combines Friday close plus market expectation.
Problem 3: roll yield in USOon. Anyone backtesting a long strategy on USOon using oil spot price as proxy misses the roll-yield drag of USO. In contango (the typical state of recent years), USO loses ~5–15 % per year against spot. Backtest results that ignore this mechanic are systematically too optimistic.
Problem 4: COPXon is equity, not commodity. Backtests treating COPXon as "copper exposure" are actually treating a small basket of mining stocks as a commodity. Correlations with copper price historically run 0.7–0.8, but with significantly higher volatility. A mean-reversion strategy calibrated on pure copper-price data behaves differently on COPX(on).
What this means for our platform
Backtesting Arena currently offers commodities as a dedicated asset class for Elite-tier users — through the underlying ETFs like GLD, SLV, USO, COPX (see our symbol list). That's the methodologically honest path: you get the full ETF history, often 10+ years of daily data, with correct market-hours logic.
What we take from the current tokenization wave — without promising features we can't deliver:
1. Backtesting tokenized commodities directly isn't useful right now. A future SLVon backtest would have 8 months of data. An SLV backtest has 18 years. Until token history extends to 3+ years, ETF backtests are more meaningful — and remain our default path.
2. Roll-yield awareness is a real gap. Backtesting a USO strategy on our platform shows ETF performance — already including roll yield. That's correct. But we're considering adding a note in Strategy Insights for USO that flags the structural roll-yield drag. That's context, not code.
3. Geopolitical reactivity as a data layer. The USOon volume spike during the Hormuz crisis is a preview of an interesting data point: how quickly do on-chain commodity tokens react to geopolitical events, and do they lead the classic ETFs? That's potentially a dedicated indicator — but a data and effort question. On the "interesting idea, not roadmap" list.
4. If tokenization actually scales, backtest tools have to scale with it. Today $5.3B market cap is a niche. If the sector reaches $50–100B in 3–5 years and tokens have 3+ years of history, direct token backtests will make sense. Until then, the answer to "backtest my SLVon setup" is: backtest on SLV — it's economically ~98 % the same.
Bottom line
Tokenized commodities are technically fascinating, economically still small — but structurally growing at an interesting spot. They offer 24/7 access to asset classes traditionally hidden behind brokerage accounts and market hours.
For backtesters today: the data is too young, token mechanics too specific, and the underlying is usually the methodologically cleaner choice. But the sector deserves attention. What happened with USOon during the Hormuz crisis wasn't daily news — it was a proof-of-concept for a vehicle class that will mature over the next few years.
When it does, the tooling will need to follow. Whether it works perfectly today is a different question.
FAQ
Does Backtesting Arena offer backtests on SLVon, USOon, or COPXon? Not directly. We offer backtests on the underlying ETFs (SLV, USO, COPX) as part of our commodities asset class for Elite-plan users. Due to the short history (<12 months) of the tokens themselves, direct token backtests aren't currently meaningful.
Is USOon the same as long-oil exposure? Economically close, but not identical. USOon mirrors USO, which holds and rolls oil futures contracts. In contango — the typical oil market structure — this creates a roll-yield drag of roughly 5–15 % per year against the spot price. Anyone wanting oil exposure without that drag has to use Brent or WTI futures directly.
Why are tokenized commodities growing now? Three drivers come together: macro demand for hard-asset hedges (inflation, geopolitics), mature DeFi infrastructure enabling 24/7 trading, and a growing global market of crypto users seeking commodity exposure without traditional brokerage — especially outside the U.S., where platforms like Ondo Global Markets are active.