Paxos Labs has launched PAXGy, a token built on PAX Gold that is designed to increase the amount of PAXG a holder can redeem as its reserves earn returns from gold leasing. According to Paxos Labs' launch announcement shared with crypto.news, the company deploys the reserves behind PAXGy to vetted institutional gold borrowers, with lending income accruing through a PAXGy-to-PAXG exchange rate rather than an increase in token balances. Holders can deposit PAXG or swap accepted stablecoins to receive PAXGy, with the token available through OKX Gold Earn and X Layer, as well as several onchain platforms including 0x, Uniswap, and Ether.Fi. As reported by PRNewswire, PAXGy is live on OKX as the only centralized exchange listing at launch, with Chainlink's CCIP serving as the exclusive cross-chain messaging provider, allowing holders to move PAXGy positions across supported chains without unwinding them first.
The reserves are placed with institutional borrowers in the bullion leasing market, according to the announcement. Refiners, jewelry makers, miners and bullion banks may borrow gold for their operations and pay a lease rate in gold terms. As reported by Paxos Labs, the market has long relied on large transactions and direct relationships with banks, limiting access for smaller holders. PAXGy is intended to give token holders access to those economics, with the reserves growing in ounce terms when the strategy earns a return. The structure gives holders a way to seek returns measured in ounces of gold rather than dollars, making PAXGy different from simply holding PAXG. According to Bhau Kotecha, Co-Founder of Paxos Labs, "Gold has been lent for thousands of years, and institutions have earned on their bullion reserves for decades. That market has never been accessible to ordinary holders of gold globally. PAXGy brings its economics to a token anyone can hold, with the assets in the reserve growing in ounce terms, redeemable for PAXG at any time."
The launch comes as tokenized gold is experiencing unprecedented growth, with trading activity reaching $90.7 billion in first-quarter 2026 spot volume, surpassing the $84.64 billion recorded throughout all of 2025. As reported by PRNewswire, tokenized gold now exceeds $5 billion in value, representing a significant shift from traditional gold holdings. Walter Hessert, Head of Strategy at Paxos, noted that "Tokenized gold now exceeds $5 billion in value and traded $90.7 billion in the first quarter of 2026, surpassing all of 2025 combined. Turning an ounce into a token makes it divisible, transferable and programmable, pooling those fractions into an institutional-size position is what brings the lending market within reach of a holder of any size." The World Gold Council's 2026 survey revealed that 37 percent of central banks actively manage their reserves through lending and swaps, highlighting the institutional scale of the gold leasing market.
Paxos Labs' product notice indicates that PAXGy carries credit, liquidity, and market risks, with returns not guaranteed. According to the company, losses in the external strategies or a borrower default could cause the PAXGy-to-PAXG exchange rate to fall, leaving a holder with less gold exposure than the amount deposited. A rise in the exchange rate would likewise not guarantee a dollar profit if the price of gold fell. For U.S. holders, the launch announcement does not state that holding the new token changes the direct PAXG redemption requirements, which require verified accounts and impose a minimum of 430 PAXG plus fees for redemption into allocated London Good Delivery bars. As reported by PRNewswire, the asset accrues value by deploying its reserves into external strategies, but growth is not guaranteed; if these strategies suffer losses or borrower defaults, the exchange rate may be adjusted downward, potentially resulting in losses.
According to Jason Lau, Chief Innovation Officer at OKX, "Gold is often the first asset people reach for when they want to preserve value, and one of the few that crosses between traditional finance and crypto without needing explanation. What it has never done is earn. We wanted our customers to have that on day one, through X Layer on day one & eventually the exchange, whichever way they prefer to hold it." The product represents Paxos' continued innovation in gold tokenization, building on PAXG's position as the only federally regulated tokenized gold asset, fully backed by investment grade gold held in LBMA vaults and independently attested by KPMG. The launch comes as gold ETFs hold approximately $530 billion in assets, with investors paying annual fees of up to 40 basis points for metal that earns them nothing, highlighting the potential for tokenized gold to offer superior returns through institutional-grade lending strategies.
