What is PAX Gold (PAXG)?
PAX Gold (PAXG) is the ERC-20 token on the Paxos ecosystem. It’s an asset-backed stablecoin, meaning that the PAXG price is pegged to the value of gold. It offers means of trading gold more flexibly by employing a decentralized system.
Paxos is a DeFi infrastructure that offers a range of services, including a centralized exchange (CEX), crypto brokerage, commodity settlements, and other stablecoins aside from PAX Gold. It aims to increase the accessibility of valuable assets in the real world and mobilize their trade in the blockchain space.
The PAX Gold price has matched the value of gold in the traditional markets from its inception. You can see the current value of this stablecoin in the chart above.
Who Is the Founder of PAX Gold?
PAX Gold, as well as the Paxos ecosystem as a whole, was founded by Charles Cascarilla. He’s an entrepreneur and financial expert who has founded and co-founded a number of centralized and decentralized projects. Cascarilla is the current CEO of Paxos.
The goal of the PAX Gold crypto service is to simplify the process of trading gold and make it more accessible by tying physical assets to digital ones. Gold is a lucrative asset to many traders due to its safe haven status, and is considered as a good option for portfolio diversification.
However, owning gold physically is inconvenient due to storage requirements and difficulties with physical trading. It can be difficult for smaller traders to access, as investment-grade gold bars can cost hundreds of thousands of dollars.
Paxos was established on the Ethereum blockchain, and PAX Gold works as an ERC-20 token. However, according to the whitepaper, there are plans to launch the project on other blockchains in the future to increase the digital accessibility of gold-backed assets. As a stablecoin, PAXG did not undergo an initial coin offering (ICO) or other pre-sale funding.
PAX Gold was developed to act as a stablecoin. Stablecoins are assets that have their value backed by a tangible asset in the real world. While the most common peg for cryptocurrencies is fiat currency, such as the USD or the Euro, others may be backed by valuable items such as diamonds or, in the case of PAXG, gold. Since gold is a scarce commodity, it can be expected that both the Pax GOLD price and the value of the physical asset will go up in the future.
What Are the Main Features of PAX Gold?
There is no predetermined cap on the max supply of PAX Gold since it depends on how much gold is available in storage. The amount of tokens in circulation is regularly minted and burned to adjust to the demand and supply. PAX Gold has a 1:1 conversion ratio with gold. This means that the PAXG price is exactly the same as the market rate of gold at any given moment.
Gold is historically considered to have low volatility, meaning that PAXG is a considerably stable asset compared to other cryptocurrencies. Given that it’s pegged to gold, the PAX Gold price is not susceptible to the overall crypto trends and instead follows the same market fluctuations as its adjacent asset.
All assets listed on PAX Gold have a real-world equivalent. According to the Paxos platform, the physical assets are supplied by London Good Delivery. One PAX Gold coin equals one troy ounce of fine gold (t oz), and the minimum required purchase is 0.01 t oz.
Unlike the traditional market, where they must own a share or a full gold bar, PAXG allows users to own a fraction of the physical asset. Each gold bar that is bound to the trade has a serial number.
Being able to hold the value of a legitimate gold bar in storage is the core function of PAXG. If a user owns enough assets that their PAX Gold price amount is equal to one gold bar, they can exchange it for the physical asset.
The security of PAXG is two-fold. The blockchain itself is protected by using the Proof-of-Work (PoW) consensus algorithm, while the gold bars are maintained in the Brink’s precious metals storage units.