Paxos Labs launches PAXGy token to generate returns through gold leasing

Paxos Labs has launched PAXGy, a token designed to generate a return measured in gold rather than by increasing the number of tokens a holder owns. The underlying reserves are deployed to vetted institutional borrowers through the gold-leasing market, testing whether tokenized bullion can also function as a yield-bearing instrument.

• PAXGy holders can obtain the token by depositing PAXG directly or swapping supported stablecoins
• Reserves backing PAXGy are lent to vetted institutional borrowers through the gold-leasing market, Paxos Labs says
• Paxos Labs says any resulting return is not guaranteed and can push the PAXGy exchange rate down

• $5B+ total value Paxos Labs cites for the tokenized gold market
• Q1 2026 trading volume already exceeded full-year 2025 totals

Paxos Labs has introduced PAXGy, a token backed by PAXG but structured to appreciate against gold rather than simply track its price, according to reporting by NewsBTC. Each PAXG represents physical gold held in institutional custody and subject to regular attestation. PAXGy layers a yield mechanism on top by directing reserves into the gold-leasing market that bullion borrowers use for financing.

The token is live across OKX, the X Layer network, Uniswap, 0x and Ether.Fi. Chainlink is also supporting the rollout.

Exchange rate, not token count, carries the gold return

Paxos Labs designed PAXGy so a holder’s balance never has to grow. Instead, each PAXGy can become redeemable for a larger amount of PAXG over time as leasing income accrues.

Holders can obtain PAXGy by depositing PAXG directly or by swapping supported stablecoins, Paxos Labs said in a post on its company blog. The underlying reserves are then deployed to vetted institutional borrowers active in the bullion lending market, a channel banks and refiners have used for decades to finance gold inventories held for trading or industrial use.

That structure separates PAXGy from PAXG, which is built purely for one-to-one exposure to physical bullion. PAXGy keeps the same custody and attestation framework but adds a lending strategy designed to move the exchange rate between the two tokens over time.

Yield adds credit and liquidity risk that plain PAXG does not carry

Paxos Labs is explicit that the return is not guaranteed. Deploying gold into external lending strategies introduces credit, liquidity and market risk, and the PAXGy exchange rate can fall if borrowers default or the underlying strategies lose money.

That warning marks the clearest difference between the two tokens. PAXG holders carry gold price risk alone, while PAXGy holders take on gold price risk plus counterparty exposure to whichever institutions borrow the leased bullion, without Paxos Labs naming those borrowers publicly.

Tokenized gold market has already topped $5 billion this cycle

Paxos Labs says the tokenized gold market has grown beyond $5 billion in total value, with trading volume in the first quarter of 2026 alone exceeding all of 2025 combined. PAXGy extends that growth by tying tokenized bullion to the leasing market that banks, refiners and jewelers have used to finance physical gold for decades.

Paxos Labs frames the token as evidence that tokenization is starting to recreate financial functions around assets like gold, not merely digitize ownership of them.

The BlockWest read. We think allocators weighing PAXGy against holding unlevered PAXG are effectively underwriting counterparty risk in a leasing market that has historically disclosed little to outside investors. Paxos Labs has not named which institutions borrow the leased gold or detailed collateral terms. That gap in disclosure, not the yield itself, is what treasuries and funds evaluating the token should be pricing in.

Paxos Labs has not published a track record for the PAXGy exchange rate or disclosed the identities of the institutional borrowers receiving leased gold, leaving allocators to watch how the rate performs and whether the firm adds borrower-level transparency as the token scales across OKX, X Layer, Uniswap, 0x and Ether.Fi.

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