A tradeable certificate representing one tonne of carbon dioxide equivalent (tCO₂e) of emission reduction or carbon removal. Companies buy carbon credits to 'offset' emissions they can't directly reduce, claiming carbon neutrality. Tokenized carbon credits (like Toucan Protocol's BCT, Moss.Earth's MCO2) move these certificates on-chain, making carbon markets more transparent and preventing double-counting — but underlying <a href="/en/glossary/commodities/carbon-credit/" target="_blank">Carbon Credit</a> quality remains the market's biggest controversy.

Carbon offset is an action or claim — companies buy carbon credits to 'offset' their carbon emissions and claim carbon neutrality. <a href="/en/glossary/commodities/carbon-credit/">Carbon Credit</a> is a tradeable certificate representing 1 tonne of CO₂ equivalent emission reduction. Often confused, but fundamentally different: carbon credits are the instrument, carbon offsetting is the act of using the instrument. Tokenized carbon credits (like BCT, MCO2) bring both concepts on-chain, but underlying quality issues remain the market's central controversy.

Contango is the state in commodity futures markets where far-month contracts are more expensive than near-month contracts. When holding tokenized commodities backed by futures (like tokenized oil), each time you 'roll' an expiring near-month contract to a far-month contract, you must use proceeds from selling the near-month to buy the more expensive far-month — this price difference is called 'rollover loss.' Holding futures-backed commodity tokens in contango, even if spot commodity prices don't move, <a href="https://claude-me.com/en/glossary/core-concepts/token/">Token</a> holders can continuously lose value.

Tokenizing commodity indices (like Bloomberg Commodity Index BCOM, S&P GSCI) that track a basket of commodities (energy, agricultural products, precious metals, industrial metals), giving holders diversified commodity market exposure. Tokenized commodity indices are more diversified than single commodities (only gold or only oil), but inherit rollover drag problems from futures-backed constituent commodities within the index, plus rebalancing transaction costs.

Tokenizing physical gold ownership, allowing investors to hold tiny fractions of gold for as little as a few dollars, with 24/7 trading, DeFi composability, and global accessibility. Representative products: PAXG (Paxos Gold, 1 PAXG = 1 troy oz London gold bar) and XAUT (Tether Gold). Unlike futures-backed tokenized oil, PAXG is physically spot-backed — no futures rollover drag.

Tokenized precious metals convert ownership of physical gold, silver, or platinum into blockchain tokens. Each token corresponds to a specific weight of metal held in a vault; holding the token means holding that metal's ownership, tradeable at any time, with some platforms offering physical redemption. Tokenized gold (PAXG, XAUT) is by far the most common; silver and platinum products exist but are fewer.