Paxos Labs Unveils Yield-Generating Token PAXGy Backed by Gold

Paxos Labs has launched PAXGy, a token backed by its existing gold-backed stablecoin PAXG. PAXGy can increase in value relative to gold over time, offering holders a potential return on their investment. The underlying reserves are deployed to vetted institutional borrowers through the gold-leasing market.

PAXG is represented by physical gold held in institutional custody, with regular attestation of its reserves. PAXGy adds another layer, allowing holders to deposit PAXG or swap supported stablecoins for PAXGy. The reserves backing PAXGy can then be lent to borrowers in the bullion market.

The return on investment is not guaranteed and introduces credit, liquidity, and market risks. If borrowers default or the underlying strategies suffer losses, the PAXGy exchange rate can move downward.

Paxos Labs explicitly warns that deploying gold into external strategies introduces risk that plain gold does not have. PAXG and PAXGy may sound almost identical, but they represent different risk profiles.