Analysis

For the first time, investors can trade gold-backed futures contracts on a leading crypto derivatives exchange. In addition to its spot market trading, PAX Gold is now available as perpetual and quarterly futures contracts on FTX.

Using PAX Gold, a stablecoin backed by gold, FTX will allow traders to buy and sell gold futures contracts via digital assets.

A futures contract is an agreement to buy or sell a specified asset at a predetermined price at a specific time in the future.

The price of PAX Gold is tied to the spot price of one troy ounce of London Good Delivery gold, a standard measure for the London gold market. With PAX Gold, a trader or investor owns the underlying physical gold stored in London vaults, which is unlike gold futures, exchange-traded funds or unallocated gold. 

By offering more sophisticated trading vehicles for digital assets, FTX hopes to pave the way for eventual options and leverage trading for PAX Gold. 

“Crypto trading is still a young market,” said Paul Ciarvardini, Head of Trading at Paxos in an email to CoinDesk. “PAX Gold futures on FTX shows how the market is maturing and that it is ready for more complex financial instruments.”

FTX is operated by Alameda Research, a cryptocurrency liquidity provider that ensures the exchange has access to deep liquidity pools essential for the health and growth of the crypto derivatives market.

[Updated with quote by Paul Ciarvardini.]

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