Now, for the first time, traders can buy and sell gold-backed futures contracts on a leading cryptocurrency derivatives exchange using the PAX Gold digital currency, Paxos said in a press release on 14 January.
According to the announcement, users of the FTX exchange can now use PAX Gold, a gold-backed stablecoin, to buy and sell gold futures contracts. The Paxos’ gold-backed cryptocurrency is not only available for spot market trading on FTX, but as perpetual and quarterly futures contracts trading as well.
A futures contract refers to an agreement to buy or sell an asset at a future date, and at an agreed upon price, with them being standardized agreements, which are typically traded on an exchange.
The FTX exchange, which was established last year, is meant to provide professional derivative trading products, including quarterly and perpetual contracts on various crypto assets, leverage tokens and over-the-counter (OTC) services.
The exchange is also operated by Alameda Research, a crypto liquidity provider, which ensures the exchange has access to deep liquidity pools. The exchange’s white paper states:
“FTX is designed by people who really know the products. Everything from collateral to maintenance margin to liquidation processes to product listing has been redesigned from the ground up by one of the heaviest users of the products. It is built by traders, for traders.”
The PAX Gold token is backed with real gold bars, meaning that holders of the token legally own physical gold. The asset is also tied to the spot price of one troy ounce of London Good Delivery gold, a standard measure for the London gold market.
Paxos commented in the press release, saying:
“By opening up this market for PAX Gold, FTX is offering more sophisticated trading vehicles for digital assets. This can also pave the way for eventual options and leverage trading for PAX Gold.”
Last year, Paxos entered into a partnership with Alpha Bullion, which expanded the PAX Gold holders option to redeem physical gold with their tokens. Through the partnership, owners of the token are now able to redeem in small sizes of gold, ranging from 1 gram to 1 kilogram.