Terrill Dicki
Jan 23, 2026 23:23
Paxos breaks down how bodily gold turns into PAXG tokens because the gold-backed crypto hits $4,997 amid flight to security. Here is what merchants have to know.
Gold-backed tokens are having a second. PAX Gold (PAXG) now instructions a $2.01 billion market cap with tokens buying and selling at $4,997—up 0.87% up to now 24 hours—as crypto traders rotate into tokenized safe-haven property amid broader market uncertainty.
The timing could not be higher for Paxos to publish a deep dive on how their tokenization course of really works.
The Mechanics Behind the Token
Every PAXG token represents one positive troy ounce of London Good Supply gold—the identical institutional-grade normal central banks use. However not like a gold ETF or futures contract, token holders personal allotted bars with particular serial numbers they will lookup on Paxos.com.
That phrase “allotted” issues. It means your tokens correspond to recognized, serialized bars sitting in LBMA-certified vaults in London—not a declare on some common pool of steel.
The minting course of runs via Ethereum good contracts that implement a strict rule: new tokens solely get created when bodily gold has been secured and allotted. Burn tokens for redemption, and the corresponding gold both ships to you (minimal 430 ounces for full bar supply) or converts to USD via Paxos.
Why Merchants Are Paying Consideration Now
Paxos reported a staggering 450% surge in property beneath administration throughout 2025, pushed largely by PAXG and their PYUSD stablecoin. That progress displays actual demand for tokenized property with verifiable backing.
However there’s friction too. Binance simply reduce PAXG’s collateral ratio from 60% to 50% on January twentieth—a transfer that would squeeze leveraged positions and have an effect on liquidity for merchants utilizing the token as margin.
The on-chain knowledge tells an attention-grabbing story. Capital has been flowing into gold-backed tokens because the broader crypto market turns defensive. For merchants who need publicity to gold with out leaving the DeFi ecosystem, PAXG presents 24/7 buying and selling, on the spot settlement, and the power to make use of holdings as collateral throughout lending protocols.
The Regulatory Angle
Paxos operates as a nationwide belief financial institution beneath OCC regulation—not a typical crypto setup. Meaning strict separation of buyer property from firm funds and month-to-month audits by impartial accounting corporations verifying the 1:1 backing.
Each transaction lives completely on Ethereum, making a verification layer that conventional gold custodians merely cannot match.
What’s Subsequent
With gold costs elevated and crypto volatility persisting, PAXG sits at an attention-grabbing crossroads. The Binance collateral reduce may dampen some DeFi exercise, however the broader pattern towards tokenized real-world property reveals no indicators of slowing. For merchants eyeing the $5,000 psychological stage, the subsequent few weeks ought to show telling.
Picture supply: Shutterstock
