Paxos tokenized gold gets a yield layer through new onchain credit business Hare

Paxos’ tokenized gold products are gaining a yield-generating layer through a new partnership with Hare, an onchain credit business backed by crypto market maker GSR. Hare launched a product called Hare Gold Earn, which uses vaults built on the Aave lending protocol to accept deposits of Paxos’ two gold-backed tokens, PAXG and PAXGy, and allow holders to earn a yield on those holdings rather than simply storing them.

Paxos Labs, the technology arm of stablecoin and tokenization company Paxos, partnered directly with Hare on integrating the gold products into the new yield vaults. GSR, the market maker behind Hare, is providing anchor liquidity for the vaults through a dedicated credit facility, a structure intended to ensure the vaults have sufficient depth to support deposits and withdrawals without relying solely on organic market demand in the early going.

The two Paxos gold tokens behave differently by design. PAXG is a token backed one-to-one by physical gold, where the number of tokens in circulation moves in line with the gold held in reserve. PAXGy, by contrast, accrues value through a rising exchange rate against PAXG: the number of PAXGy tokens an investor holds stays constant, while the amount of gold each token is entitled to increases over time, functioning similarly to how an accumulating share class in a traditional fund reinvests returns rather than distributing them.

By pairing tokenized gold with an onchain lending venue, Hare and Paxos are extending a broader trend in digital-asset infrastructure: converting tokenized real-world assets, which have historically functioned mainly as a settlement or custody improvement over physical gold, into instruments that can also generate a yield through decentralized finance protocols such as Aave. Whether that yield proves durable will depend on continued borrowing demand within the vaults and the depth of GSR’s backing liquidity, neither of which has an established track record yet given the product’s recent launch.