Paxos Labs launched PAXGy on September 24, a tokenized product designed to give retail investors access to institutional gold lending markets that have operated for 50 years largely behind institutional walls.
Gold lending has been quoted daily in professional markets for half a century, but participation has been restricted to institutional players through high minimums, bilateral bank relationships, and specialized settlement infrastructure. PAXGy attempts to democratize access by wrapping gold-leasing economics into a token backed by Paxos Gold (PAXG).
How PAXGy Works
Rather than distributing returns in dollars or cryptocurrency, PAXGy is designed to appreciate against PAXG. Holders enter with exposure to a certain amount of gold and, if the lending strategy performs as intended, can eventually redeem their position for more ounces of gold than they started with.
Gold backing the token is deployed to vetted institutional borrowers in the existing leasing market. Returns feed into PAXGy's exchange rate against PAXG, meaning each token becomes redeemable for more gold over time without necessarily increasing the number of tokens in a wallet.
Market Size and Context
Approximately $530 billion in gold sits in exchange-traded funds, where investors typically pay annual fees up to 40 basis points for exposure to an asset that generates no income. Tokenized gold has grown beyond a $5 billion market cap, recording $90.7 billion in trading volume during the first quarter of 2026.
Gold lending itself is not a new practice. Refiners, jewelry manufacturers, miners, and bullion banks regularly borrow metal rather than purchasing it outright and pay lease rates for doing so. Central banks also participate, with 37 percent of respondents in the World Gold Council's 2026 survey saying they actively manage reserves through lending and swaps.
Where PAXGy Is Available
PAXGy is live on OKX Gold Earn and X Layer, as well as onchain through Uniswap, 0x, and Ether.fi. Chainlink's CCIP protocol handles cross-chain messaging, allowing positions to move across supported chains without being unwound first. Paxos Labs indicated more venues are expected to follow.
The underlying gold mechanics remain unchanged—returns ultimately depend on actual lending activity rather than any inherent income generated by gold itself.
