Why gold needs a term market

Step 1 — Tokenized gold

PAXG is tokenized gold: onchain ownership of physical gold. On its own, it pays no yield.

In traditional markets, the closest thing to a “gold interest rate” is the gold lease rate: what banks and dealers charge to lend physical metal. It is set bilaterally, is not transparent to most participants and is not accessible to ordinary holders.

Step 2 — Yield-bearing gold

Yield-bearing wrappers such as PAXGy add a yield component on top of the gold:

PAXGy
=
gold principal
+
future gold yield

That yield is variable. How much it will be over the next month or year is uncertain, and the underlying position carries its own issuer, strategy and smart-contract risks.

Step 3 — A price for time

Once gold produces variable yield, three questions follow:

• Can I lock what I earn until a certain date?
• Can I sell the yield I expect to earn, and get paid today?
• What does the market think gold will yield in 30 days, 6 months or a year?

In fixed income these are answered by term markets and a yield curve. For tokenized gold, none existed.

What Aureus adds

Aureus does not create the underlying gold yield. It creates a market for it. PAXGy already generates gold yield; if you only want to hold it, there is no reason to move it into Aureus.

Aureus separates the two economic components of yield-bearing gold, principal and future yield, for a chosen maturity, and makes each one tradable. That is what lets you sell, buy, hedge or lock the future yield of gold. The prices at which they trade imply a rate for every maturity. Together, those rates form the Aureus Gold Term Curve.

PAXGy shows what gold yields today. Aureus creates a market for what gold may yield tomorrow.

Note

Aureus is not a new gold token and does not custody physical gold. It builds on top of existing yield-bearing gold.