PAX Gold (PAXG)
is an ERC-20 token (meaning it is compatible with the Ethereum blockchain and other networks that are based on Ethereum) that is pegged to one troy ounce of a 400-ounce London Gold Delivery gold bar. Holders of PAXG tokens actually own the underlying asset, which is held by the Paxos Trust Co. and which can be redeemed at any point.
PAXG price tracks the price of the gold it represents, which is subject to changing market conditions. The token seeks to make purchasing gold bullion easier, faster and more accessible through fractional ownership.
Paxos Trust introduced PAX Gold in September 2019. Unlike with many cryptocurrencies, there is no maximum supply for the asset because Paxos Trust can issue as many tokens as demand requires.
Issuance of PAXG is subject to market demand for the gold-backed token and is not subjected to a fixed schedule. When a user redeems a PAXG token for physical gold, the corresponding PAX Gold token is burned immediately.
Because PAXG’s value is based on the price of gold, it sees regular ups and downs. Although gold is considered a store of value, its price momentum has yielded ups and downs over the years. PAX Gold spiked to over $2,000 in January 2021 before tumbling to just below $1,700 in late February 2021. A new surge occurred in May 2021, with the token reaching an all-time high value
of $2,155.11 on May 17.
How Does PAX Gold Work?
Every PAXG token is backed by one ounce of allocated gold stored in Brink’s vaults. For smaller amounts, physical gold retailers are used to help investors redeem their tokens.
PAXG uses the same consensus protocol and blockchain features as Ethereum, including access to smart contracts
Paxos Trust uses Chainlink’s data oracle product to provide real-time price information for gold and the PAXG token. An oracle is technology that brings data from an external source to a blockchain.
Key Events and Management
PAX Gold (PAXG) was founded by the Paxos Trust, the same company that manages the Paxos brokerage platform. The firm has received $540 million in funding from investors, including Mithril Capital Management, PayPal Ventures, Declaration Partners and Oak HC/FT Partners.
In 2019, the gold-backed token received regulatory approval
from the New York State Department of Financial Services, allowing Paxos Trust to offer the token to investors in the state.
In September 2020, Celsius Network – an interest-bearing crypto account platform – added PAX Gold
to its platform, allowing users to earn interest on their PAXG deposits. A month later, Celsius Network competitor, Nexo, also added PAXG
to its platform.