Paxos Labs Launches Gold Token That Can Earn A Return In Gold

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  • Paxos Labs has launched PAXGy, a token backed by PAXG that can increase in value relative to gold over time.
  • The underlying reserves are deployed to vetted institutional borrowers through the gold-leasing market.
  • PAXGy is live across platforms including OKX, X Layer, Uniswap, 0x and Ether.Fi, but the return is not guaranteed.

**ID:** N25-09

**Site:** NewsBTC

**Status:** READY

**Author:** NewsBTC Editorial Team

**Focus Keyword:** Paxos

**Image Keyword:** Gold

**Category:** Altcoins

**Tags:** Paxos, PAXG, PAXGy, Gold, Tokenization

**Primary Source:** https://www.paxos.com/blog

The Token Balance Stays The Same While Its Gold Value Can Grow

PAXGy is backed by PAXG.

Each PAXG represents physical gold held in institutional custody, with the underlying reserves subject to regular attestation.

PAXGy adds another layer.

Paxos Labs says holders can deposit PAXG or swap supported stablecoins for PAXGy.

The reserves backing PAXGy can then be lent to vetted institutional borrowers in the bullion market.

When those strategies generate a return, that value accrues through the PAXGy exchange rate.

The holder’s number of tokens does not have to increase.

Instead, each PAXGy can become redeemable for more PAXG over time.

That is a very different model from simply holding tokenized bullion.

Yield Also Introduces Risk That Plain Gold Does Not Have

There is no free yield here.

Paxos Labs explicitly warns that deploying gold into external strategies introduces credit, liquidity and market risks.

If borrowers default or the underlying strategies suffer losses, the PAXGy exchange rate can move downward.

Growth is not guaranteed.

That distinction matters because PAXG and PAXGy may sound almost identical while representing different risk profiles.

PAXG is designed around direct exposure to physical gold.

PAXGy adds a yield-generating strategy on top of that exposure.

The token is launching with support from OKX, X Layer, 0x, Uniswap, Ether.Fi and Chainlink.

Paxos Labs says tokenized gold has now grown beyond $5 billion in total value, while trading volume during the first quarter of 2026 exceeded the whole of 2025.

PAXGy is an attempt to make that market more financially productive.

Instead of tokenizing gold simply so it can move onchain, the product tries to connect it to a centuries-old lending market as well.

It is another example of tokenization starting to recreate financial functions around an asset, not merely digitize ownership of it.

*This article was written by the News Desk and edited by [Samuel Rae](https://www.newsbtc.com/author/rae-samuel/).*