PAXG is an ERC-20 token that acts as a digital representation of one troy ounce of a 400 oz London Good Delivery gold bar.

Token Utility

PAXG operates as a digital representation of real world gold, and can be used as an alternative way to access the asset class. PAXG can be viewed as a method to invest in gold, or to transfer value on-chain. PAXG can also be redeemed for physical gold.

Brief History

Developed by Paxos, a New York-based financial institution also responsible for Pax Dollar (USDP), PAXG is a cost-effective method of owning investment-grade gold. Each unit of PAXG is matched one-to-one with one fine troy ounce of gold stored in LBMA vaults in London. PAXG represents an innovative combination of a powerful legacy asset class that has been imbued with all the benefits of blockchain technology.  

PAXG  - in their own words

PAXG offers investors a cost-effective way to own investment-grade physical gold with all the benefits of the blockchain. Each Pax Gold (PAXG) token is backed by one fine troy ounce of gold, stored in LBMA vaults in London. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company.

Risks of PAXG

PAX Gold (PAXG) is a cryptoasset. While each token is backed by physical gold held in vaults, your investment is in a digital token, not the physical gold itself. This carries specific risks:

• No Regulatory Protection: PAXG is not regulated by the FCA. You will not have access to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS) if something goes wrong.
  • Redemption: Physical redemption of gold is subject to minimum amounts (typically 1 full troy ounce) and may involve additional fees or processing delays. To redeem directly with Paxos, users need a verified Paxos account (KYC/AML compliance). Users can then send PAXG tokens to Paxos, and they either arrange physical delivery or send the equivalent cash value, minus any applicable fees. Paxos publishes a fee schedule for redemptions, and physical delivery involves additional logistics costs. Paxos offers a few ways to redeem PAXG:
  • Physical gold redemption: Token holders can redeem for actual, allocated London Good Delivery gold bars. Since these bars typically weigh around 400 troy ounces, you'd generally need at least ~430 PAXG (bars vary slightly in weight) to redeem for a full physical bar. The gold can be collected from Brink's vault facilities in London.
  • Unallocated gold / cash redemption: Holders of smaller amounts can redeem their PAXG through Paxos for the equivalent fiat currency (USD) value at current gold spot prices. This can be done directly through a Paxos account.
• On-chain sale: Holders can of course sell PAXG on exchanges or DEXs at any time, though this isn't technically a "redemption" from Paxos. Technical & Custodial Risk: You are exposed to the risk of the token issuer (Paxos), the security of the underlying blockchain, and the vaulting provider. If these entities fail, become insolvent, or are hacked, you could lose your entire investment. PAXG's gold is specifically London Good Delivery standard, stored in LBMA-approved vaults (Brink's), which means it meets the highest internationally recognized standards for gold quality and custody. The LBMA is the international trade association representing the London over-the-counter (OTC) bullion market and provides the following services:
  • Good Delivery List: The LBMA maintains the "Good Delivery List," which is the globally accepted standard for the quality of gold and silver bars traded in the wholesale market.
  • Price discovery: The LBMA oversees the LBMA Gold Price, set twice daily (10:30 AM and 3:00 PM London time) through an electronic auction process administered by ICE Benchmark Administration.
  • Market standards & practices: The LBMA sets standards for trading practices, responsible sourcing (including conflict-free gold requirements), and vault/custody operations. Its Responsible Gold Guidance aligns with OECD due diligence standards.

Price Volatility: While PAXG tracks the price of gold, its market value can fluctuate, and there is no guarantee that the token will always trade at the exact spot price of gold.

For more information on PAXG, click here.