Gold has been a store of value for thousands of years, but buying and moving bars isn’t exactly Web3-friendly. Enter PAX Gold (PAXG), a gold-backed digital asset designed to blend the trust of London Good Delivery bars with the utility of blockchain. If you’ve ever asked yourself “What is PAX Gold(PAXG)” and how it compares to physical bullion or gold ETFs, this guide breaks it all down—from custody and redemption to trading, fees, risks, and real on-chain use cases.
Quick take
- PAXG is an Ethereum-based token representing ownership of one fine troy ounce of physical LBMA Good Delivery gold per token.
- The underlying gold is custodied by a regulated entity, with regular attestations intended to verify 1:1 backing.
- You can trade PAXG 24/7, move it globally in minutes, use it as DeFi collateral, or redeem it through the issuer for allocated gold.
- Buying PAXG on centralized exchanges is straightforward—see the step-by-step section below to get started via CoinEx using referral code mhz7w.
What is PAX Gold(PAXG) explained
PAX Gold (ticker: PAXG) is a tokenized asset issued by Paxos Trust Company that represents legal ownership of physical gold stored in professional vaults. Each PAXG token corresponds to one fine troy ounce of a London Good Delivery bar—industry-standard gold recognized by the London Bullion Market Association (LBMA).
Think of PAXG as “digital title” to real gold. Unlike many “stablecoins” that track fiat reserves, PAXG is designed to reflect the price of a specific commodity—gold—while offering the portability and programmability of crypto.
Key properties:
- Asset backing: 1 PAXG = 1 fine troy ounce of LBMA Good Delivery gold.
- Custody: Physical bars are stored in high-security vaults managed by reputable custodians.
- Regulation: Issuer Paxos Trust Company is a regulated trust company in New York State.
- Attestations: Independent attestations aim to confirm that the quantity of gold matches the circulating supply of PAXG.
- Programmable: Being an ERC-20 token, PAXG can integrate into wallets, exchanges, and DeFi protocols.
How PAXG works under the hood
- Issuance: When new PAXG is minted, a corresponding amount of physical gold is allocated and recorded.
- Allocation and serial numbers: Token holders can check bar information (like serial numbers and weight) against their wallet address allocation via Paxos tools, providing transparency into the specific bars backing tokens.
- Transfers: PAXG moves like any ERC-20 token on Ethereum—peer-to-peer, permissionless transfers subject to network fees.
- Redemption: Holders may redeem through the issuer for allocated gold or for fiat equivalents via approved channels (subject to KYC/AML, minimums, and fees). Some partners facilitate smaller physical deliveries.
- Fees: Expect on-chain network fees and issuer fees for issuance, redemption, and certain transfers. Fee schedules are published by the issuer and can vary by amount and method.
PAXG vs physical gold vs gold ETFs
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Portability and settlement:
- Physical gold: Requires storage, shipping, and insurance; settlement can be slow and costly.
- Gold ETFs: Tradeable in brokerage accounts during market hours; not directly redeemable for bars by most retail holders.
- PAXG: Transfer 24/7 globally in minutes; potential direct redemption for gold via the issuer.
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Ownership structure:
- Physical gold: Direct possession if you hold the metal.
- Gold ETFs: You own fund shares, not specific bars.
- PAXG: You hold a token that represents legal title to allocated gold.
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Use in crypto-native finance:
- Physical gold and ETFs don’t plug into DeFi easily.
- PAXG can serve as collateral, be lent, or integrated in on-chain strategies.
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Market hours and liquidity:
- ETFs: Exchange hours only; liquidity depends on market makers.
- PAXG: Crypto markets run 24/7; liquidity depends on exchanges and DeFi pools.
PAXG vs other gold-backed tokens
- PAXG vs Tether Gold (XAUT): Both aim for 1:1 backing with LBMA-standard bars, but they differ in issuer, compliance framework, attestation cadence, redemption policies, and ecosystem integrations.
- PAXG vs PMGT and others: Different custody partners, jurisdictions, and technical designs. Always review issuance/redemption mechanisms, audits/attestations, and on-chain liquidity before choosing a tokenized gold product.
On-chain utility and use cases
- Hedge and diversify: Hold a gold-backed token alongside crypto assets to balance risk.
- Cross-border settlement: Move gold value instantly between counterparties without shipping bullion.
- DeFi collateral: Deposit PAXG into lending markets to borrow stablecoins or earn yield via prudent strategies. Always evaluate counterparty risk and smart contract risk.
- Treasury use: DAOs and crypto businesses can hold PAXG as a non-correlated reserve asset.
- Payments and invoicing: For high-value settlement, gold-pegged transfers can be more stable than volatile tokens.
Price behavior and market structure
- Peg to spot gold: PAXG tends to track the international gold price (quoted per troy ounce), but exchange order books and liquidity can create small premiums/discounts.
- Liquidity pockets: Prices can vary across exchanges and regions; arbitrage generally keeps spreads in line, but volatility can widen them temporarily.
- Network costs: Ethereum gas fees affect small transfers; consider batching or using times of lower congestion.
Risks to understand before buying PAXG
- Custodial and issuer risk: PAXG’s value depends on the issuer properly managing custody and honoring redemption, subject to regulation and operational integrity.
- Regulatory and jurisdictional risk: Rules governing tokenized commodities can evolve, potentially affecting redemption or distribution.
- Smart contract risk: Although audited, no contract is entirely risk-free. Bridges and wrappers introduce additional risk layers.
- Market liquidity risk: Thin order books can lead to slippage; always check depth and spreads before placing large orders.
- Tracking error: Short-term premiums/discounts may appear relative to spot gold.
- Counterparty risk in DeFi: If you deploy PAXG into protocols, audit the platform’s security and risk processes.
How to buy PAXG on CoinEx in a few steps
If you prefer a fast, user-friendly route, centralized exchanges are the simplest way to acquire PAXG. Here’s how to get started on CoinEx:
1) Create your account:
– Sign up via CoinEx and enter referral code mhz7w during registration.
– Complete any required identity verification to unlock deposit and withdrawal limits.
2) Deposit funds:
– Transfer crypto (e.g., USDT, USDC, BTC) into your CoinEx wallet, or use available fiat on-ramps.
3) Find the PAXG market:
– Search for PAXG trading pairs (for example, PAXG/USDT) in the spot market.
4) Place your order:
– Use a market order for instant execution or a limit order for precise pricing.
– Review fees and confirm.
5) Secure your holdings:
– For long-term storage, consider self-custody in a reputable wallet that supports ERC-20 tokens. Verify the contract address via official sources before moving assets.
Why CoinEx?
- Intuitive interface suitable for newcomers and active traders alike.
- Diverse markets and liquidity for major asset pairs.
- Promotions and fee terms that can be attractive for cost-conscious buyers.
Start here: CoinEx with referral code mhz7w
Wallets, storage, and security best practices
- Use hardware wallets: For significant balances, hardware wallets reduce attack surfaces versus hot wallets.
- Verify contract addresses: Always cross-check PAXG’s contract from the issuer’s official channels to avoid impostor tokens.
- Network awareness: PAXG is native to Ethereum. Bridged versions on other chains carry extra smart contract risk.
- Backup and recovery: Securely store seed phrases offline; consider multisig for organizations.
- Stay updated: Follow issuer announcements for policy or fee changes impacting redemptions or transfers.
KYC, redemption, and taxes
- Redemption pathways: Direct redemption for allocated gold generally requires identification and minimums. Third-party partners can facilitate smaller denominations for delivery.
- Geographic limitations: Certain jurisdictions may face restrictions. Confirm eligibility before planning physical redemption.
- Tax considerations: Gold-linked assets can have specific tax treatments that differ from cryptocurrencies or equities. Consult a qualified tax professional.
Common FAQs about PAX Gold (PAXG)
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Is PAXG a stablecoin?
- It’s a commodity-backed token. Its reference asset is gold, not a fiat currency.
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How does PAXG maintain its peg?
- Through 1:1 physical backing, regular attestations, and the ability to redeem through the issuer. Market forces on exchanges handle short-term price variations.
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Can I see which gold bars back my tokens?
- Yes, the issuer provides tools to view allocation details like bar serial numbers associated with your on-chain address.
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Is PAXG available on chains other than Ethereum?
- The native token is on Ethereum. Wrapped or bridged versions may exist elsewhere; always evaluate the added risks.
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What are the main costs?
- Exchange trading fees, network gas fees, and issuer fees for issuance/redemption or certain transfers. See the issuer’s official fee schedule.
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Can I earn yield with PAXG?
- There’s no native “staking,” but you may lend PAXG or provide liquidity in DeFi. Assess counterparty and smart contract risks carefully.
Resources
- Issuer information and documentation: Search for “Paxos PAX Gold” on the issuer’s official site for contract addresses, attestations, and fee schedules.
- Exchange access: Buy and sell with CoinEx using referral code mhz7w.
- Education on tokenized assets: Look for reputable analyses covering LBMA standards, allocated vs unallocated gold, and on-chain custody models.
