r/cryptocurrency Apr 20, 03:59 PM
Platforms are offering yield on PAXG but gold doesn't generate native yield. How does this actually work? Was browsing some staking options for my ETH and SOL and stumbled across something I couldn't immediately explain: yield on PAXG.
PAXG is physically backed by gold. Good doesn't secure a network, doesn't get staked in any POS sense, and doesn't generate cash flows. So is a platform offering APY on it, that yield has to be coming from somewhere - and that somewhere matters a lot for understanding the actual risk profile.
My best guess is they're running over-collateralized lending behind the scenes, or routing it into DeFi liquidity pools. Both of these generate real yield, but both also introduce counterparty and smart contract risk that's completely different from running a validator node.
Has anyone dug into how this works - on Basis Pro or anywhere else? Curious whether the yield is even risk - adjusted well enough to be worth it, or if it's basically just lending risk dressed up in a staking UI.
submitted by /u/rahulchadhaofficial
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