Gold has long been a symbol of wealth and stability. With the advent of blockchain technology, investors can access this precious metal in a digital form. Tokenized gold assets like PAX Gold (PAXG) and Tether Gold (XAUt) offer a modern approach to gold investment, combining the timeless value of gold with the flexibility of cryptocurrencies.
Flashift will explore the key differences between PAXG and XAUt, examining aspects such as liquidity, regulatory compliance, and integration with financial platforms. Whether you’re a seasoned investor or new to the world of digital assets, understanding these options will help you make an informed decision about incorporating tokenized gold into your portfolio.
Let’s delve into the world of digital gold and see how PAXG and XAUt compare.
Understanding Tokenized Gold: PAXG and XAUt Explained
Tokenized gold refers to digital tokens on a blockchain that represent ownership of physical gold. Each token is backed by a specific amount of gold stored in secure vaults, ensuring that the digital asset has tangible value. This innovation allows for fractional ownership, easier transferability, and integration with decentralized finance (DeFi) platforms.
What is PAX Gold (PAXG)?
PAX Gold (PAXG) is a digital asset issued by Paxos Trust Company, a regulated financial institution under the New York State Department of Financial Services (NYDFS). Each PAXG token represents one fine troy ounce of a 400 oz London Good Delivery gold bar, stored in Brink’s vaults in London.
Key Features:
- Physical Backing: Every PAXG token is fully backed by physical gold, ensuring that holders have direct ownership of the underlying asset.
- Regulatory Compliance: Paxos operates under strict regulatory oversight, providing monthly audits and transparency reports to verify the gold reserves backing PAXG.
- Redeemability: Holders can redeem PAXG tokens for physical gold bars or fiat currency, offering flexibility in asset management.
- Blockchain Integration: As an ERC-20 token on the Ethereum blockchain, PAXG can be easily traded, transferred, and integrated into various DeFi applications.
- Transparency: PAXG holders can view the serial number, weight, and purity of their allocated gold bars through the Paxos dashboard, ensuring full transparency.
What is Tether Gold (XAUt)?
Tether Gold (XAUt) is a gold-backed digital token issued by TG Commodities Limited, a subsidiary of Tether Limited. Each XAUt token represents ownership of one fine troy ounce of physical gold stored in Swiss vaults.
Key Features:
- Physical Backing: XAUt tokens are fully backed by physical gold bars that meet the London Bullion Market Association (LBMA) Good Delivery standard.
- Transparency: Tether provides a system for XAUt holders to verify their gold allocation by entering their wallet address, enhancing trust in the token’s backing.
- Redeemability: Holders can redeem XAUt tokens for physical gold, subject to certain minimum requirements and procedures outlined by Tether.
- Blockchain Integration: XAUt is available as an ERC-20 token on the Ethereum blockchain, facilitating easy trading and integration with various digital platforms.
- Audit and Compliance: Tether conducts regular attestations to confirm the gold reserves backing XAUt, ensuring that each token is adequately collateralized.
Both PAXG and XAUt offer innovative solutions for investors seeking exposure to gold through digital means. While PAXG emphasizes regulatory compliance and detailed transparency, XAUt offers flexibility and accessibility within the Tether ecosystem. Investors should consider their specific needs and preferences when choosing between these tokenized gold options.
Key Differences Between PAXG and XAUt
PAX Gold (PAXG) and Tether Gold (XAUt) are both tokenized gold assets, each representing one troy ounce of physical gold. While they share this fundamental similarity, they differ in several critical aspects, including their issuers, regulatory oversight, custody practices, transparency measures, and blockchain compatibility.
Issuer and Regulatory Oversight
PAX Gold (PAXG): Issued by Paxos Trust Company, a U.S.-based financial institution regulated by the New York State Department of Financial Services (NYDFS). Paxos is also licensed as a major payments institution by the Monetary Authority of Singapore, ensuring compliance with stringent regulatory standards in multiple jurisdictions.
Tether Gold (XAUt): Issued by TG Commodities Limited, a subsidiary of Tether Limited. Unlike Paxos, TG Commodities is not a regulated financial entity, and holders of XAUt rely on contractual protections enforceable under the laws of the British Virgin Islands.
Custody and Storage Locations
PAX Gold (PAXG): The physical gold backing PAXG tokens is stored in professional vault facilities, such as Brink’s, in London. Each token corresponds to a specific gold bar, and holders have ownership rights to that gold under the custody of Paxos Trust Company.
Tether Gold (XAUt): XAUt tokens are backed by physical gold stored in secure vaults located in Switzerland. Each gold bar meets London Bullion Market Association (LBMA) “Good Delivery” standards, and the gold is allocated to specific token holders.
Transparency and Audit Practices
PAX Gold (PAXG): Paxos publishes monthly reserve reports on its digital assets, including PAXG, to ensure full transparency and reliability of financial data. These reports confirm that each PAXG token is backed by one fine troy ounce of gold.
Tether Gold (XAUt): Tether has conducted attestations to confirm that each XAUt token is backed 1:1 by physical gold. However, the frequency and depth of these audits are less consistent compared to Paxos, and Tether has faced criticism over transparency in the past.
Blockchain Compatibility and Token Standards
PAX Gold (PAXG): PAXG is an ERC-20 token on the Ethereum blockchain, making it compatible with a wide range of Ethereum-based wallets and decentralized applications (dApps).
Tether Gold (XAUt): XAUt is also an ERC-20 token operating on the Ethereum blockchain, allowing for similar compatibility with Ethereum wallets and dApps.
In summary, while both PAXG and XAUt offer digital representations of physical gold, PAXG provides greater regulatory oversight and transparency, whereas XAUt offers flexibility within the Tether ecosystem but with less regulatory clarity. Investors should consider these differences when choosing between the two tokenized gold options.
Below is a comprehensive comparison table highlighting the key differences between PAX Gold (PAXG) and Tether Gold (XAUt):
| Feature | PAX Gold (PAXG) | Tether Gold (XAUt) |
| Issuer | Paxos Trust Company, a U.S.-based financial institution regulated by the New York State Department of Financial Services (NYDFS) . | TG Commodities S.A. de C.V., a subsidiary of Tether Limited, licensed as a stablecoin issuer and digital asset service provider by the National Commission of Digital Assets (CNAD) in El Salvador . |
| Regulatory Oversight | Subject to stringent regulatory standards in the U.S., including regular audits and compliance with NYDFS regulations . | Operates under regulatory oversight in El Salvador, having obtained a license as a stablecoin issuer and digital asset service provider from CNAD . |
| Custody and Storage | Physical gold is stored in London Bullion Market Association (LBMA) approved vaults, such as Brink’s, in London . | Physical gold is stored in secure vaults located in Switzerland, meeting LBMA “Good Delivery” standards . |
| Transparency and Audits | Paxos publishes monthly reserve reports and undergoes regular audits by independent third-party firms to verify that each PAXG token is backed by one fine troy ounce of gold . | Tether provides attestations confirming that each XAUt token is backed 1:1 by physical gold, with reports published quarterly. The gold reserves are audited by BDO Italia . |
| Blockchain Compatibility | PAXG is an ERC-20 token on the Ethereum blockchain, ensuring compatibility with Ethereum-based wallets and decentralized applications . | XAUt is also an ERC-20 token operating on the Ethereum blockchain, allowing for similar compatibility with Ethereum wallets and decentralized applications . |
| Redemption Options | Holders can redeem PAXG tokens for physical gold bars or fiat currency, subject to certain minimum requirements and procedures outlined by Paxos . | Holders can redeem XAUt tokens for physical gold, subject to certain minimum requirements and procedures outlined by Tether . |
| Minimum Purchase Amount | Paxos offers PAXG with a low minimum purchase amount and zero storage fees, making it accessible to a wide range of investors . | Tether Gold allows for fractional ownership, enabling investors to purchase small amounts of XAUt tokens, with each token representing one troy ounce of gold . |
| Audit Frequency | Monthly audits conducted by independent third-party firms . | Quarterly attestations provided by BDO Italia . |
| Transparency Tools | PAXG holders can view the serial number, weight, and purity of their allocated gold bars through the Paxos dashboard . | Tether provides a system for XAUt holders to verify their gold allocation by entering their wallet address, enhancing trust in the token’s backing . |
| Token Standard | ERC-20 | ERC-20 |
Trading and Liquidity Considerations
When evaluating tokenized gold options like PAX Gold (PAXG) and Tether Gold (XAUt), it’s crucial to consider their trading volumes, exchange listings, and overall market liquidity. These factors influence the ease with which investors can buy or sell these assets and their integration into various trading platforms.
Liquidity and Market Depth
PAX Gold (PAXG): As of recent data, PAXG exhibits a 24-hour trading volume of approximately $67 million, indicating robust market activity. The token’s presence on major exchanges contributes to its liquidity, allowing for efficient trade execution with minimal slippage.
Tether Gold (XAUt): XAUt demonstrates a 24-hour trading volume of around $23 million. While this is lower than PAXG’s volume, XAUt maintains sufficient liquidity on its listed exchanges, facilitating smooth trading operations.
Both tokens’ liquidity profiles suggest that investors can engage in significant trading activities without substantial market impact, though PAXG currently offers higher trading volumes.
Generally, both PAXG and XAUt are accessible through multiple reputable exchanges and offer adequate liquidity for most trading needs. PAXG’s higher trading volume may appeal to investors seeking greater market activity, while XAUt provides a solid alternative with its own set of exchange listings and liquidity levels.
Use Cases and Integration in 2025
DeFi Integration and Yield Opportunities
PAX Gold (PAXG): As an ERC-20 token, PAXG is widely integrated into DeFi protocols. Investors can lend PAXG on platforms like Compound and Aave to earn interest, or provide liquidity on decentralized exchanges (DEXs) to capture trading fees. This integration enables gold holders to generate passive income, a feature not available with traditional gold investments.
Tether Gold (XAUt): XAUt has also found its place in the DeFi landscape. Some lending and staking platforms have begun accepting XAUt as collateral, allowing holders to earn yields. Additionally, Tether’s introduction of “Alloy by Tether” enables users to secure XAUt through smart contracts and mint aUSDT tokens, expanding its utility within DeFi.
Physical Redemption Options
PAX Gold (PAXG): PAXG holders have the option to redeem their tokens for physical gold bars. Direct redemption through Paxos requires a minimum of 430 PAXG tokens, corresponding to the size of a standard London Good Delivery gold bar. For smaller amounts, Paxos partners with Alpha Bullion, allowing users to redeem as little as 1 gram of gold, making physical redemption more accessible.
Tether Gold (XAUt): XAUt tokens can be redeemed for physical gold, typically requiring a minimum of 430 tokens. The redemption process involves account verification with TG Commodities Limited, and the physical gold can be delivered to addresses within Switzerland. Alternatively, holders can request the sale of the gold and receive cash proceeds.
Both PAXG and XAUt have successfully bridged the gap between traditional gold investments and the digital asset ecosystem. Their integration into DeFi platforms provides innovative avenues for yield generation, while their redemption options offer flexibility for investors seeking physical gold ownership.
Fees, Costs, and Accessibility
When evaluating tokenized gold assets like PAX Gold (PAXG) and Tether Gold (XAUt), understanding the associated fees and investment requirements is crucial. Below is a comparative overview:
Transaction and Gas Fees
PAX Gold (PAXG):
Paxos charges a minimal fee of 0.02% for on-chain transfers of PAXG tokens, and as an ERC-20 token, PAXG transactions incur Ethereum network gas fees, which can vary based on network congestion.
When converting PAXG to or from USD, unallocated gold, or physical gold bars through Paxos, fees are applied based on the transaction amount. For example, transactions between 2 and 25 PAXG incur a 1.00% fee, while larger transactions have reduced fees.
Tether Gold (XAUt):
Tether Gold does not charge additional transaction fees beyond the standard blockchain gas fees. As an ERC-20 token, XAUt transactions are subject to Ethereum gas fees, which fluctuate based on network activity. A fee of 0.25% is applied during the issuance and redemption processes of XAUt tokens.
Minimum Investment Requirements
PAX Gold (PAXG):
The minimum purchase amount for PAXG on Paxos.com is 0.03 PAXG, accounting for the conversion fee. PAXG is divisible up to 18 decimal places, allowing investors to own fractional amounts of gold, making it accessible for small-scale investments.
Tether Gold (XAUt):
The minimum purchase amount directly from Tether Gold is 50 XAUt tokens, equivalent to 50 troy ounces of gold. XAUt tokens are divisible down to six decimal places, enabling fractional ownership and flexibility in investment amounts.
Security and Risk Assessment
When evaluating tokenized gold assets like PAX Gold (PAXG) and Tether Gold (XAUt), it’s essential to consider their security measures and potential risks. Both tokens employ smart contracts and are subject to regulatory environments that influence their reliability and trustworthiness.
Smart Contract Security and Audits
PAX Gold (PAXG):
- Audit History: PAXG‘s smart contracts have undergone formal verification by CertiK, a leading blockchain security firm.
- Security Ratings: Cyberscope, another reputable auditor, has assessed PAXG, assigning it a security score of 71%, placing it in the top 10% of audited projects.
Tether Gold (XAUt):
- Audit History: XAUt’s smart contracts have been audited by Cyberscope, receiving a security score of 71%, similar to PAXG.
- Past Vulnerabilities: In April 2023, a vulnerability was identified in XAUt’s smart contract, allowing unauthorized transfers. The issue was promptly addressed and resolved by the development team.
Counterparty and Regulatory Risks
PAX Gold (PAXG):
PAXG is issued by Paxos Trust Company, a regulated financial institution under the New York State Department of Financial Services (NYDFS). It adheres to stringent regulatory standards, including monthly reserve audits conducted by top-tier firms like KPMG, ensuring transparency and trust. Operating under U.S. regulatory oversight, PAXG presents a lower counterparty risk compared to unregulated counterparts.
Tether Gold (XAUt):
XAUt is issued by TG Commodities Limited, a subsidiary of Tether Limited. While not directly regulated in the U.S., XAUt has obtained licensing in El Salvador. Tether provides quarterly assurance opinions on XAUt’s gold reserves, audited by BDO Italia. Given Tether’s history with transparency concerns, XAUt carries a higher counterparty and regulatory risk compared to PAXG.
Final Recommendation
Choose PAXG if you:
- Prioritize regulatory compliance and transparency.
- Seek integration with DeFi platforms for yield opportunities.
- Require high liquidity and broad exchange access.
- Desire flexible physical redemption options.
- Prefer lower entry barriers for investment.
Choose XAUt if you:
- Are comfortable with less regulatory oversight.
- Plan to invest larger sums and hold long-term.
- Do not require extensive DeFi integration or frequent trading.
Ultimately, both PAXG and XAUt provide digital avenues to invest in gold, each catering to different investor needs. Assessing your investment goals, risk tolerance, and desired level of engagement with DeFi platforms will guide you to the appropriate choice.
Flashift’s Role in Facilitating Tokenized Gold Investments
Flashift’s AI-powered system continuously scans a vast network of over 1,500 tokens across more than 100 blockchains, including both decentralized (DEXs) and centralized exchanges (CEXs). This comprehensive analysis enables the platform to present users with the best available exchange rates in real-time. To assist users in making informed decisions, Flashift assigns specific tags to each exchange offer:
- Best Rate: Identifies the most favorable exchange rate currently available.
- Recommended: Highlights exchanges that balance optimal rates with high user satisfaction and compliance standards.
- Best in KYC: Points to exchanges with streamlined or minimal Know Your Customer requirements, catering to users valuing privacy and ease of access.
These AI-generated tags empower users to select exchange options that align with their specific needs, whether prioritizing cost-efficiency, regulatory compliance, or transaction speed. As a non-custodial platform, Flashift ensures that users maintain full control over their assets throughout the trading process.
In summary, Flashift facilitates the trading and management of PAXG and XAUt by combining AI-driven exchange aggregation with the security and autonomy of a non-custodial platform. This integration ensures that users can navigate the tokenized gold market with confidence and convenience.
If you have further questions or need assistance with using Flashift for your tokenized gold investments, feel free to ask!
FAQs:
- What are the main differences between PAXG and XAUt?
Both PAXG and XAUt are tokenized gold assets, each representing one troy ounce of physical gold. The key differences lie in their issuers, regulatory compliance, and redemption options:
- PAXG: Issued by Paxos Trust Company, a U.S.-regulated entity under the New York State Department of Financial Services (NYDFS). PAXG offers monthly audits by KPMG and allows redemption for physical gold bars stored in LBMA-approved vaults in London.
- XAUt: Issued by TG Commodities Limited, a subsidiary of Tether Holdings Limited. While not regulated in the U.S., XAUt has obtained licensing in El Salvador. The physical gold backing XAUt is stored in Swiss vaults, and redemption is possible for larger quantities, subject to specific procedures.
- Can I redeem these tokens for physical gold?
- PAXG: Yes, PAXG holders can redeem their tokens for physical gold bars. Direct redemption through Paxos requires a minimum of 430 PAXG tokens, corresponding to a standard London Good Delivery gold bar. For smaller amounts, Paxos partners with Alpha Bullion, allowing redemptions as small as 1 gram.
- XAUt: Yes, XAUt tokens can be redeemed for physical gold, typically requiring a minimum of 430 tokens. The redemption process involves account verification with TG Commodities Limited, and the physical gold can be delivered to addresses within Switzerland.
- Which token is better integrated into DeFi platforms?
PAXG has broader integration within decentralized finance (DeFi) ecosystems. It is supported on platforms like Aave, Compound, and Uniswap, allowing users to lend, borrow, and earn yields. XAUt has more limited DeFi integration but can still be used on certain platforms.
- What are the transaction fees and minimum investment requirements?
- PAXG: Paxos charges a 0.02% fee for on-chain transfers of PAXG tokens. Ethereum network gas fees also apply. The minimum purchase amount on Paxos.com is 0.03 PAXG, making it accessible for small-scale investors.
- XAUt: Tether Gold does not charge additional transaction fees beyond standard blockchain gas fees. However, the minimum purchase amount directly from Tether Gold is 50 XAUt tokens, equivalent to 50 troy ounces of gold, which may be a higher entry point for some investors.
- How secure are PAXG and XAUt tokens?
- PAXG: PAXG’s smart contracts have undergone formal verification by CertiK, a leading blockchain security firm. Additionally, Paxos provides monthly audits conducted by top-tier firms like KPMG, ensuring transparency and trust.
- XAUt: XAUt’s smart contracts have been audited by reputable firms, and Tether provides quarterly assurance opinions on XAUt’s gold reserves, audited by BDO Italia. While Tether has faced scrutiny over transparency in the past, it continues to take steps to ensure the security and verifiability of the gold backing its tokens.
