Pax Gold (PAXG) is an asset-backed token, where one token represents one fine troy ounce of a London Good Delivery gold bar, stored in professional vault facilities. Anyone who owns PAXG has ownership rights to that gold under the custody of Paxos Trust Company. Since PAXG represents physical gold, its value is tied directly to the real-time market value of that physical gold. PAXG gives customers the benefits of actual physical ownership of specific gold bars with the speed and mobility of a digital asset. Customers can also have fractional ownership of physical bars.

On the Paxos platform, customers can convert their tokens to allocated gold, unallocated gold, or fiat currency (and vice versa) quickly and efficiently, reducing their exposure to settlement risk. PAXG is available for trading on Paxos’ itBit exchange and other crypto-asset exchanges (Binance, Kraken, Uniswap), lending platforms, and elsewhere within the crypto ecosystem.  At any time, PAXG holders can lookup the serial number, value and physical characteristics of their vaulted gold just by entering their Ethereum wallet address on the PAXG lookup tool on here.

The amount of gold representing the total supply of PAXG is at a 1:1 ratio – one fine troy ounce of gold equals one PAXG token. The total supply of gold representing PAXG changes continuously as the market capitalization of PAXG increases and decreases.

There is a difference between allocated and unallocated gold. When a customer trades for allocated gold bars, they receive ownership rights to specific gold bars that are held in a precious metal dealer’s vault on the customer’s behalf. Allocated gold is identifiable with a unique serial number, purity rating, and weighting for each bar.  

When a customer trades for unallocated gold, they do not have actual ownership of specific gold bars; instead, they have a general entitlement to a certain quantity of gold that an institution promises to deliver. This is hypothetical gold, but the liability lies with the institution in question. This is similar to the way a traditional bank operates – customers don’t own specific notes, but they have credit that can be paid out upon request.

What are the fees associated with Pax Gold?

On-Chain Transaction fees: there are two kinds of fees that occur when you send PAXG on the blockchain:

• Standard ‘gas’ fee: sending digital assets on Ethereum requires computing power, or ‘gas.’ Just like any other Ethereum token, $PAXG requires standard gas fees to be paid in ETH to compute the transaction
• PAXG on-chain transaction fee: PAXG charges an additional fee, which is set at 0.02% of the amount of PAXG sent on the blockchain

Whenever PAXG tokens are sent on Ethereum network, Paxos charges a small (0.02%) fee of the amount of PAXG sent on the blockchain. This means that 0.02% of on-chain transaction fees are covered by users. For example, if you want to send 10 PAXG from one Ethereum address to another, and you want to ensure that the receiver gets at least 10 PAXG after fees, you should send at least 10.0020004001 PAXG in total, to cover the cost of the on-chain transaction fee. Whereas, if you initiated a transfer of 10 PAXG, the receiver would get 9.998 PAXG after fees.

Storage fees: Paxos does not charge gold storage fees to its customers at this time

Creation and Destruction fees: whenever you buy or sell $PAXG from your Paxos account (on either the wallet dashboard or PAX Gold pages), Paxos charges small fees (see fees in the picture below) to process both the creation and destruction of PAXG tokens. This includes all sales or conversions of PAX Gold to or from USD, gold bars or unallocated gold.

These fees do not apply when purchasing & selling tokens through their exchange order book, or anywhere else outside the Paxos wallet.