PAX Gold is a tokenized asset on the Ethereum blockchain, where each token represents one troy ounce of physical gold held in secure vaults. It offers blockchain-based ownership of gold with the ability to transfer, trade, or redeem the asset. ^[1]

Overview

PAX Gold (PAXG) is an ERC-20 token issued by Paxos Trust Company that represents ownership of physical gold. Each token is backed by one troy ounce of London Good Delivery gold stored in Brinks' vaults. Launched in September 2019, PAXG allows users to digitally trade, transfer, and verify their gold holdings, offering faster settlement than traditional gold markets. The New York State Department of Financial Services fully regulates the token, and monthly audits ensure its token supply matches the physical reserves.

To modernize gold investment, PAXG was designed to make gold more divisible, tradable, and accessible while maintaining the benefits of physical ownership. Paxos holds the gold for token holders, who can redeem PAXG for gold bars, fiat, or other digital assets. As a blockchain-based stablecoin pegged to gold, PAXG has gained support across the crypto ecosystem, including a notable $5 million acquisition by crypto lender Nexo shortly after launch. ^{[1] [5] [6]}

Features

PAXG (Pax Gold) offers features that make it a flexible and secure digital representation of physical gold. It is fully backed by London Good Delivery gold bars held in secure vaults, and each token corresponds to a specific bar, allowing for verifiable and allocated ownership. Operable on the Ethereum blockchain, PAXG enables 24/7 global transferability and supports fractional ownership with a minimum investment as low as 0.01 PAXG. The token is regulated by the New York State Department of Financial Services (NYDFS), and Paxos maintains strict asset segregation to ensure tokens are bankruptcy-remote.

Users can redeem PAXG for physical gold, unallocated gold, fiat currency, or other digital assets. Retail and institutional investors can convert tokens into gold through Paxos or affiliated gold retailers. The smart contract is based on the audited Paxos Standard code, with additional security audits conducted for reliability. PAXG charges no storage fees and offers low creation, redemption, and transaction costs. Its programmable nature and compatibility with Ethereum wallets and exchanges allow seamless integration in trading and DeFi applications. ^{[1] [6]}

Utility

PAXG is a digital alternative to physical gold, offering utility for investors, traders, and crypto users. Paxos creates and destroys PAXG tokens based on user demand, allowing account holders to convert between PAXG, U.S. dollars, and unallocated gold in a Loco London account. Those over 430 ounces in PAXG can redeem them for a physical gold bar. Holders can also view their gold's serial number and characteristics by entering their Ethereum address on the Paxos website.

The token is designed for many users, including retail and institutional investors, and supports trading on global crypto exchanges, often against assets like Bitcoin. PAXG appeals to individuals interested in gold for its scarcity and independence from centralized entities, and its presence on blockchain platforms allows seamless integration into digital finance ecosystems. Additionally, PAXG plays a role in lending and borrowing markets, potentially enabling holders to earn interest through crypto lending platforms. ^{[1] [5]}

Technology

PAX Gold is an ERC-20 token built on the Ethereum blockchain, using a standardized smart contract protocol that defines token attributes, tracks balances, and facilitates transfers. Its integration with Ethereum ensures compatibility with existing infrastructure, such as wallets and exchanges, and benefits from Ethereum’s security, decentralization, and transparency. PAXG can interact with decentralized applications, automated swap protocols, and other smart contracts, allowing seamless utility across Ethereum-based financial services.

Ownership of PAXG represents fractional shares of allocated London Good Delivery gold bars, with each token linked to specific gold identified by serial numbers and weights. Paxos attempts to minimize the number of bars assigned to each user, but holders may own fractions of multiple bars. Token allocations may be updated regularly to reflect transfers, redemptions, or other activity. While PAXG is currently exclusive to Ethereum, future deployment on other blockchains is under consideration if practical benefits arise. ^[1]