Crypto Whale Deploys $38M Leveraged DeFi Bet on Tokenized Gold — Here’s the Strategy
Forget vaults and safety deposit boxes. A major crypto player just built a $38 million position in digital gold—using nothing but code, leverage, and sheer nerve.
The Mechanics of a Mega-Bet
The whale didn't just buy. They engineered the position. By tapping into decentralized finance (DeFi) lending protocols, they borrowed one asset to acquire another, amplifying their exposure to tokenized precious metals. It's a high-stakes arbitrage on the future of value itself—where smart contracts replace goldsmiths and collateral ratios are king.
Why Tokenized Gold? Why Now?
In a landscape of algorithmic stablecoins and memecoin mania, physical gold's digitized twin offers a compelling narrative: stability meets blockchain efficiency. This whale isn't just betting on price. They're betting on institutional adoption, on gold's ancient store of value finding new life on-chain. It's a hedge within the hedge—a classic finance move dressed in a crypto leather jacket.
The Risky Edge of Leverage
Leverage supercharges gains—and liquidations. One volatile swing could trigger a cascade, turning a $38 million masterpiece into a cautionary tweet. The whale is dancing on the razor's edge that defines DeFi: maximum efficiency with maximum peril. They're confident the math holds. The market will decide.
A cynical observer might call it the ultimate alchemy—turning borrowed digital dollars into a mountain of synthetic gold, proving once again that in modern finance, you can indeed create something from nothing. Until you can't.
Whale takes up leveraged gold exposure through looped borrowing
According to transactional data from deBank, the wallet borrowed USDe several times and swapped it into gold-backed token XAUt. Each transaction saw the whale borrow $11,600 worth of USDe and convert it into approximately 2.51 XAUt.
Whales are using looped borrowing to buy #gold.
Wallet 0x8522 has bought 8,337 $XAUt($38.4M) over the past 20 days, while borrowing 18.3M $USDe from Aave.https://t.co/C1ii4MVoVc pic.twitter.com/9A8dtYxiLm
— Lookonchain (@lookonchain) January 16, 2026
The address borrowed about $18.3 million in USDe in total from Aave, routed through decentralized exchange aggregator CoW swap.
Looped borrowing is a defi tactic that involves supplying an asset as collateral, borrowing against it, and then supplying the borrowed amount back into the protocol, which can be repeated several times.
For example, a user can deposit one unit of an asset into Aave, borrow up to a certain percentage based on loan-to-value limits, and then redeposit the borrowed amount.
A deposit of one ETH could become 1.75 ETH supplied and 0.75 ETH borrowed after a single loop. Several loops may magnify the exposure while also increasing liquidation risk if prices grow more volatile.
It is not known who was the first trader to use looped borrowing, but the strategy first came to the public’s attention during the yield farming boom of 2020, when governance token incentives made leveraged positions lucrative to the defi community. Some users had already experimented with similar mechanics after MakerDAO launched in 2017.
Today, looping is common in protocols such as Aave, Morpho, and Spark. Morpho has previously said that a majority of its volume comes from users who looped their assets.
Tokenized gold trades continue as bullion price bull run cools
The whale’s accumulation comes as global gold prices counted its first back-to-back losses on Thursday’s close to Friday morning US sessions, since the year began. Spot gold extended losses from the previous session, pressured by stronger US economic data and a silent week in geopolitics.
Gold slipped 0.1% to $4,610.86 per ounce by 12:00 GMT, after touching a record high of $4,642.72 earlier in the week. Despite the pullback, the special metal is on track for a weekly gain of about 2% when the business week ends today.
US gold futures for February delivery slumped 0.2% to $4,615, while the greenback index hovered NEAR a six-week high. US job data released earlier in the week showed initial jobless claims fell to 198,000 last week, well below economists’ expectations.
A stronger dollar, by historical evidence, makes gold more expensive for overseas buyers.
“There was a lot of momentum in the gold market, which seems to have faded slightly at the moment,” said Julius Baer analyst Carsten Menke. He believes the recent US economic news created headwinds for bullion prices.
Gold demand in India stayed muted as record prices dampened retail buying. In China, bullion traded at a premium as demand was mostly steady in preparation for the Lunar New Year.
Meanwhile, people inside Iran told Reuters that protests had subsided since earlier in the week, which may have reduced the immediate demand for safe-haven assets.
Looking at other precious metals markets, silver dropped 1.6% to $90.82 per ounce, though it has retained enough profits to see out the week with a 13% uptick, having hit an all-time high this week.
“The silver market seemed very determined to reach the $100 per ounce threshold before moving lower again,” Menke explained.
Platinum fell 3.2% to $2,332.70 per ounce, and Palladium slid 2.6% to $1,754.35 after hitting a recent low and is heading for a weekly loss.
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