What Is PAX Gold (PAXG)? The Gold-Backed Token for Digital Investors

LeeMaimai

/Oct 24, 2025

Key Takeaways

• PAXG is an ERC-20 token backed 1:1 by physical gold stored in London vaults.

• It offers benefits like instant settlement, global transferability, and programmability for on-chain finance.

• Investors can redeem PAXG for physical gold or USD, subject to fees and KYC requirements.

• Risks include regulatory changes, custodial structure, and on-chain transaction costs.

• A hardware wallet is recommended for secure storage of PAXG.

Gold has been a cornerstone of wealth preservation for centuries. PAX Gold (PAXG) brings that same store‑of‑value to the blockchain: each PAXG represents one fine troy ounce of London Good Delivery gold held in professional vaults. For crypto-native investors, it’s a way to hold allocated gold with on-chain portability, 24/7 liquidity, and programmatic settlement.

This guide explains what PAXG is, how it works, where it fits in a modern portfolio, the risks to know, and how to self‑custody it securely.

Quick Definition

PAX Gold (PAXG) is an ERC‑20 token on Ethereum issued by Paxos Trust Company, a regulated custodian.
Each token is backed 1:1 by an ounce of physical gold stored in London vaults and is redeemable for gold. See Paxos’ product page and legal framework for details and monthly attestations. Reference: Paxos PAX Gold overview and attestations (click through for documentation and monthly reports).
Because it’s on Ethereum, PAXG can be transferred like any other token and integrated into smart contracts. Reference: ERC‑20 standard.

Authoritative resources:

PAX Gold by Paxos
NYDFS approval of PAX Gold in 2019
ERC‑20 token standard at ethereum.org
LBMA Good Delivery standards

Why PAXG Exists

Tokenized gold aims to combine the resilience of physical gold with the speed and composability of crypto rails:

Instant settlement and global transferability without shipping bars or using legacy intermediaries
Programmability for use as collateral, hedging, and escrow in on‑chain finance
Transparent reserves and on‑chain traceability

This approach has gained traction as gold touched record highs in 2024 and remained strong in 2025 amid macro uncertainty and central bank demand. Reference: Reuters on gold hitting record highs in 2024; World Gold Council market insights.

At the same time, tokenized real‑world assets (RWA) have grown into a meaningful segment of crypto markets, with live dashboards tracking their market cap and usage. Reference: 21.co tokenized assets research.

How PAXG Works

1:1 backing and allocation: Each token represents one fine troy ounce from a specific London Good Delivery bar. Holders can look up associated bar information via Paxos’ tools. Reference: Paxos PAX Gold details.
Regulated issuance: Paxos Trust Company is a New York–regulated trust company supervised by the New York Department of Financial Services (NYDFS). Reference: NYDFS authorization of PAX Gold.
Redeemability: Verified customers can redeem PAXG for physical gold (subject to fees, minimums, and KYC/AML) or for USD at Paxos. See the Paxos fee schedule and redemption terms. Reference: Paxos fee schedule (PAXG fees).
Monthly attestations: Independent accountants (Withum) provide monthly attestations that total PAXG supply matches or is fully backed by gold under custody. Reference: Paxos attestations.

On‑chain specifics:

Network: Ethereum mainnet (ERC‑20)
Contract address: 0x45804880De22913dAFE09f4980848ECE6EcbAf78 (verify on Etherscan)
Transferability: Standard token transfers with an additional small PAXG transfer fee set by Paxos plus Ethereum gas. Reference: Paxos PAXG fees and Etherscan token page.

Fees and Mechanics

Paxos publishes a transparent fee schedule that typically includes:

Token creation/redemption fees (tiered by size)
A small on‑chain PAXG transfer fee (in addition to gas)
Physical delivery/withdrawal fees if taking possession of bars

The exact amounts can change, so always check the current fee table. Reference: Paxos PAXG fees.

Where PAXG Fits in a Portfolio

Common use cases:

Digital gold hedge: A hedge against currency debasement and macro shocks, with the convenience of on‑chain settlement
On‑chain collateral: Potentially used in smart contracts for lending, hedging, or structured strategies (availability and parameters vary by protocol)
Settlement asset: A neutral, globally recognized asset for B2B settlement or treasury diversification

Market context:

Gold’s strong performance in 2024–2025 has renewed investor interest in gold‑linked instruments, including tokenized gold. Reference: Reuters coverage of record highs.
The broader RWA theme—tokenizing traditional assets on public chains—continues to grow, with live metrics tracked by independent research firms. Reference: 21.co tokenized assets research.

Risks to Understand

Custodial and legal structure: PAXG represents allocated ownership of specific bars custodied by Paxos’ vault partners under a bailment framework. While this reduces commingling risk, it still introduces issuer and custodian risk. Review the legal terms and disclosures carefully. Reference: Paxos PAX Gold documentation.
Regulatory risk: PAXG operates under NYDFS oversight; regulatory changes can impact redemption, market access, or compliance obligations. Reference: NYDFS authorization.
On‑chain risk: Ethereum network fees and congestion can affect transfer costs and timing. Token approvals, phishing, and contract interactions require strong operational security. Reference: ERC‑20 standard overview.
Liquidity and pricing: PAXG market liquidity may differ from spot gold or gold futures. Slippage can occur during large on‑chain swaps or in volatile periods. Reference: CoinMarketCap PAXG markets overview.
Bridging/wrapped forms: PAXG’s native chain is Ethereum. Versions on other networks often rely on third‑party bridges, introducing additional smart‑contract and counterparty risk. Use caution and verify bridge risk disclosures.

How to Buy and Move PAXG

On‑chain: You can acquire PAXG via decentralized exchanges on Ethereum. Always verify the token contract address on Etherscan before swapping. Reference: Etherscan contract page.
Direct with Paxos: Eligible customers can create/redeem PAXG with Paxos following KYC and settlement processes. Reference: Paxos PAX Gold product page and fees.

Operational tips:

Start with a small test transfer when interacting with a new venue
Use limit orders where possible to control slippage
Monitor gas prices and set appropriate fee strategies

How to Store PAXG Securely

Given PAXG’s high intrinsic value, self‑custody best practices are essential:

Verify the token contract address on Etherscan before adding assets in your wallet UI. Reference: Etherscan contract page.
Use a hardware wallet to isolate private keys from internet‑connected devices.
Enable a strong PIN and, if supported, a passphrase for plausible deniability.
Keep an offline record of your seed phrase, split or sharded if appropriate. Avoid cloud backups.
Regularly review token approvals with trusted tools; revoke unneeded allowances.

Using OneKey with PAXG:

OneKey supports Ethereum and ERC‑20 tokens, letting you custody PAXG with offline signing and open‑source transparency.
Typical flow: initialize your OneKey device, add an Ethereum account in the OneKey App, receive a small test amount of PAXG to confirm, then transfer the remainder. You can also view and verify the PAXG contract details via Etherscan before sending.
For long‑term holders who simply want digital ownership of allocated gold with minimal attack surface, a hardware wallet setup like OneKey plus good operational hygiene is a practical path.

Note: Do not share your seed phrase. Avoid interacting with unverified smart contracts. For larger positions, consider using multisig or additional policy controls where available.

Frequently Asked Questions

Is PAXG the same as a gold ETF? No. PAXG is a tokenized representation of allocated gold on Ethereum. It settles peer‑to‑peer and can be self‑custodied. ETFs are securities that trade on stock exchanges and settle through traditional market infrastructure. Review each product’s prospectus or disclosure docs to understand rights, costs, and risks.
Can I redeem PAXG for physical bars? Paxos offers redemption options for verified customers, subject to fees and minimum sizes. Smaller amounts may be redeemed via partners or for USD. Reference: Paxos PAXG fees and product documentation.
How do I verify my PAXG is backed by specific bars? Paxos provides monthly attestation reports and tools for allocation lookup tied to your Ethereum address. Reference: Paxos attestations and PAX Gold details.
What happens if Ethereum fees spike? Transfers may become temporarily expensive. You can batch moves during off‑peak times or wait until network congestion eases. Reference: ERC‑20 and Ethereum fee mechanics.

The Bottom Line

PAX Gold bridges the world’s oldest safe‑haven asset with modern, programmable finance. If you want the economic exposure of allocated gold with the self‑sovereignty of crypto, PAXG is a compelling option—provided you understand issuer, regulatory, and on‑chain risks.

For investors planning to hold meaningful amounts of PAXG, a dedicated hardware wallet offers the strongest day‑to‑day security. OneKey combines open‑source transparency, offline key storage, and smooth Ethereum support—making it a solid fit for long‑term, high‑value assets like PAXG.

References and further reading: