Author:Theo
Compiled by: TechFlow
TechFlow Insights: While the crypto world is still debating "real yield," a Singaporean department store is using century-old gold leasing to provide tangible income sources for on-chain protocols. This article breaks down how the assets behind thUSD and thGOLD flow from the jewelry counters of Mustafa Centre onto the blockchain, serving as a must-read for anyone interested in RWA and stablecoin yield origins.
Theo's protocol channels the needs of physical gold retailers like Singapore's Mustafa Centre into on-chain yield, connecting a century-old leasing market with thUSD and thGOLD.
Mustafa Centre in Singapore sells approximately 1,100 pounds of gold jewelry monthly from just one outlet. By their own account, their inventory at any given time is close to one ton, valued at over $100 million at current prices. Yet they bear almost no gold price volatility risk. This sounds contradictory but is standard practice in physical gold trading, and it explains why a growing share of on-chain gold yield actually originates from here.
The Constant Inventory Principle
We spent an entire afternoon observing their operations in-store. What struck us wasn't the staggering sales volume, but how they manage their position. Inventory is constant. They sell 110 pounds of jewelry today, they buy back 110 pounds of gold that same day. Sell more tomorrow, buy back more. The gold in-store is treated as a constant, not a variable. The result? This business makes only the profit margin on each sale, nothing more. Even if gold prices rise 20%, Mustafa doesn't make an extra 20% on that ton of inventory; if prices fall 20%, they don't lose on it either. Their income depends on how much jewelry is sold, not on where gold prices go.
Retailers who let inventory float with the market, whether intending to or not, end up making leveraged bets on gold prices. Businesses that last for decades often choose not to do this, because running a jewelry business and trading commodities require different balance sheets and different investors.
The Unit of Account is Key
Holding a ton of gold requires tying up the capital for a ton of gold. At spot prices, that means parking nine-figure assets within a retail operation. Outright purchase would consume capital better deployed into stores and working capital. So retailers do what refineries, processors, and mints have done for over a century: they borrow gold and pay for its use. This is the demand side of the gold leasing market. Lenders with access to physical inventory provide the gold, lessees pay a rate for holding and using it, with their inventory and forward orders as collateral. The lessee gets gold without tying up capital or taking price risk, and the lender earns a return on an otherwise idle asset. We explained this mechanism in detail in "The Gold Lease Credit Market Behind thUSD." The key point for now is this: this demand is not speculative. It comes from operating businesses with real order books, and it exists in all market conditions because people buy jewelry whether gold is expensive or cheap.
Not in Plain Sight
The gold leasing market is indeed opaque, and it's necessary to be honest about the limitations of public information. The London Bullion Market Association (LBMA) discontinued the Gold Forward Offered Rates (GOFO) benchmark on January 30, 2015, so forward and lease rates can no longer be publicly calculated as they were for the previous two decades. GOFO, published daily since 1989, was the foundation for pricing gold swaps, forwards, and leases. The World Gold Council, when compiling its official gold reserve series, directly excludes gold used as collateral, deposits, and swaps, but does not publish the specific quantities excluded. There is no public data on the overall lease balance. What can be observed is the scale of the surrounding market. According to World Gold Council data, in June 2026, daily gold trading volume across over-the-counter, exchange, and ETF channels totaled approximately $373 billion. Within London's settlement system, the net daily settlement of gold among the four market-making banks exceeded 20 million ounces; based on LBMA settlement data, this was worth about $87 billion per day in February this year. This figure still excludes a significant amount of real trading activity, as these statistics are net figures and, by the London Precious Metals Clearing Ltd's (LPMCL) own description, omit several categories of transfers. Currently, above-ground gold stocks are estimated at around 219,900 tonnes, with central banks holding about 36,500 tonnes.
Anyone claiming to know the precise size of the leasing market is estimating. We are no different, and we prefer to state that plainly rather than pretend otherwise.
The Other Side of the Lease
Every lease has two sides. Retailers want gold without price risk. The other side requires someone who owns gold and is willing to lend it. Historically, this side belonged to gold banks and a handful of funds with vault relationships and credit teams capable of assessing the operations of physical trade businesses. The barrier was never the yield, but the access. We reached this market through Libeara. It's a tokenization platform incubated by SC Ventures, Standard Chartered's venture arm, and co-developed with FundBridge Capital on the "MG 999 On-Chain Gold Fund." MG 999 is a structured, collateralized private credit fund: it tracks gold spot performance while lending against physical inventory, with Mustafa Gold listed as its first borrower when the fund launched in December 2025. Libeara first connected us with Mustafa's team. This structure is the point, not a footnote. Counterparty due diligence, fund governance, and regulatory packaging are handled by institutions whose business it is. That is why this income stream can be recognized by departments not specializing in commodity trading.
thUSD and thGOLD are built on top of this market. The counterparties are businesses like Mustafa: real order books, regular credit assessment, and demand that doesn't depend on crypto risk appetite to exist.
What Gold Leasing Means for On-Chain Yield
The gold leasing market has financed physical gold trade for over a century. Retailers borrow gold, pay a lease rate, and avoid gold price volatility. Lenders earn a return on otherwise idle gold.
thUSD and thGOLD are designed to channel these lease revenues to token holders. The constraint has always been access, not yield.
