Paxos Labs Launches PAXGy Gold Token with Yield Potential

Paxos Labs introduced PAXGy, a new token that is backed by the existing PAXG token, which represents physical gold held in institutional custody. Unlike a simple tokenized gold holding, PAXGy aims to generate additional returns by lending the underlying gold reserves to vetted institutional borrowers.

How PAXGy Works

Holders can deposit PAXG or swap supported stablecoins for PAXGy. The gold reserves backing PAXGy are then deployed into the bullion‑leasing market. When those lending strategies generate a return, the value is reflected in the PAXGy exchange rate, allowing each PAXGy to become redeemable for more PAXG over time. The token balance itself does not increase; instead, the redemption value rises.

Risk Profile

Paxos Labs notes that the yield‑generating approach introduces credit, liquidity and market risks that plain gold does not carry. If borrowers default or the lending strategies incur losses, the PAXGy exchange rate could decline. The product therefore carries a different risk profile from PAXG, which is designed for direct exposure to physical gold.

Platform Availability

PAXGy is live on several platforms, including OKX, X Layer, Uniswap, 0x, Ether.Fi and Chainlink. The launch follows growth in the tokenized gold market, which Paxos reports has exceeded $5 billion in total value, with first‑quarter 2026 trading volume surpassing the entire 2025 volume.

Purpose and Outlook

The token seeks to make the tokenized gold market more financially productive by connecting it to a centuries‑old gold‑leasing market, rather than merely digitizing ownership. It represents an example of tokenization extending beyond simple asset representation to recreate traditional financial functions on‑chain.