Paxos Labs launches PAXGy token backed by PAX Gold

Paxos Labs has launched PAXGy, a token built on PAX Gold that is designed to increase the amount of PAXG a holder can redeem as its reserves earn returns from gold leasing. Holders can deposit PAXG or swap accepted stablecoins to receive PAXGy. Paxos Labs says lending income accrues through a PAXGy-to-PAXG exchange rate, rather than an increase in token balances. PAXGy is available through OKX Gold Earn and X Layer, with access through several onchain platforms. Borrower defaults or losses in the reserve strategies could lower the exchange rate, according to Paxos Labs. According to Paxos Labs’ launch announcement shared with crypto.news, the company deploys the reserves behind PAXGy to vetted institutional gold borrowers. As the borrowers pay to lease the metal, the company says the value of each PAXGy rises in PAXG terms. Holders can redeem PAXGy for PAXG, although the amount returned depends on the exchange rate at the time. The structure gives holders a way to seek returns measured in ounces of gold rather than dollars. It also makes PAXGy different from simply holding PAXG: the return depends on the performance of a lending strategy, while the dollar value of both tokens remains exposed to changes in the gold price, Paxos Labs said. How PAXGy turns gold leasing into token returns Paxos Labs said a holder can enter the product by depositing PAXG or swapping an accepted stablecoin. Instead of distributing additional tokens to the wallet, income from the reserve assets is designed to increase the amount of PAXG redeemable for each PAXGy. The reserves are placed with institutional borrowers in the bullion leasing market, according to the announcement. Refiners, jewelry makers, miners and bullion banks may borrow gold for their operations and pay a lease rate in gold terms. Paxos Labs said the market has long relied on large transactions and direct relationships with banks, limiting access for smaller holders. “Gold has been lent for thousands of years, and institutions have earned on their bullion reserves for decades,” Paxos Labs co-founder Bhau Kotecha said in the announcement. He said PAXGy is intended to give token holders access to those economics, with the reserves growing in ounce terms when the strategy earns a return. The distinction between the two tokens matters for anyone entering or leaving the product. Under Paxos’ PAXG terms, each PAXG represents one fine troy ounce of London Good Delivery gold held on a segregated basis for holders. PAXGy, by contrast, is built on PAXG and uses reserves in an external lending strategy, as described by Paxos Labs. For direct redemptions through the Paxos platform, the PAXG terms require a verified account. They also set a minimum of 430 PAXG, plus a fee, for redemption into an allocated London Good Delivery bar. Those conditions concern the underlying PAXG product; Paxos Labs describes the exit from PAXGy as redemption into PAXG. Where PAXGy is available at launch Paxos Labs named OKX as PAXGy’s only centralized exchange listing at launch and said the token is available through OKX Gold Earn and X Layer. It also named 0x, Uniswap and Ether.Fi among its onchain launch partners. Additional venues are expected to follow, the company said. For transfers between blockchains, Paxos Labs selected Chainlink’s Cross-Chain Interoperability Protocol as its exclusive messaging provider. The company said holders can move a PAXGy position across supported chains without first redeeming it for PAXG. Availability through a particular exchange or service may still depend on that provider’s terms and the holder’s location. The launch comes as tokenized gold is being used for more than spot trading. In August, Arch Lending began accepting PAXG and Tether Gold as collateral for loans, according to an earlier crypto.news report. Arch’s service lets eligible holders borrow against their tokens; PAXGy instead seeks a return by placing reserve assets with gold borrowers. Trading activity has also increased. A report on tokenized gold volume in May cited CoinGecko data showing $90.7 billion in first-quarter 2026 spot volume, above the $84.64 billion recorded throughout 2025. CoinGecko identified PAXG and Tether Gold as the main contributors to that market’s trading activity. What U.S. holders need to know about the risks Paxos Labs’ product notice says PAXGy carries credit, liquidity, and market risks. Returns are not guaranteed: losses in the external strategies or a borrower default could cause the PAXGy-to-PAXG exchange rate to fall, leaving a holder with less gold exposure than the amount deposited. A rise in the exchange rate would likewise not guarantee a dollar profit if the price of gold fell. For U.S. holders considering the underlying asset, Paxos’ PAXG terms spell out a separate set of redemption conditions. Only verified customers can purchase PAXG from Paxos or convert and redeem it directly through its platform, and the company says it may refuse a transaction in circumstances described in those terms. PAXGy’s launch announcement does not state that holding the new token changes those direct PAXG redemption requirements. Paxos Labs said tokenizing gold allows smaller holdings to be pooled into positions large enough for institutional leasing. Chief executive and co-founder Charles Cascarilla described PAXGy as a way to put tokenized gold to work after it has been made transferable onchain. The company’s notice says any resulting growth still depends on the reserve strategy, and its exchange rate may be adjusted downward if that strategy incurs losses.