How to Earn Interest on Paxos Gold?
Paxos Gold (PAXG) is a gold-backed stablecoin from Paxos, which also offers a US dollar-backed stablecoin known as Paxos Standard (PAX). When it comes to asset-backed stablecoin, Paxos Gold leads the tally. Unlike the majority of cryptocurrencies, PAXG is not highly volatile as it is backed by Gold, a globally accepted asset. But its prices are susceptible to any fluctuations in the gold prices.
Are you hodling Paxos Gold? There is a better way to hodl Paxos Gold. Keeping your PAXG in an interest account will help you earn more. Follow the steps below to earn interest up to 8.2% APY on Paxos Gold:
- Signup for an Interest Account
To begin earning interest on PAXG, you will need an interest account. Visit the website of a Paxos Gold interest account provider and go to their registration page. There, you will have to enter your legal name and email ID. Now, Click on the submit button.
- Verify Your Account
You will receive an email from the interest account provider after completing the registration process. The email will contain a verification link, which you must click to verify your email address. Your account is still not ready to begin earning interest. For that, you will have to go through a KYC process.
To complete a KYC process, you will have to provide your personal details, a government-issued identity card, and a photo of yourself holding the card. Once you have added the information about yourself along with the document and the photograph, click on the submit button. You will receive an email from the interest account provider about KYC approval within a few days.
There won't be any signup and KYC processes if you decide to earn interest on PAXG from a DeFi interest account provider. All you need to earn interest on PAXG from a DeFi platform is a wallet with enough PAXG funds. Connect your wallet, such as Metamask and Trustwallet, with the DeFi platform and deposit PAXG into your DeFi interest account. The interest accrual process is automatic on DeFi platforms.
- Deposit Your Paxos Gold
The next step after KYC approval is to deposit PAXG in your interest account. For that, go to the page that lists all the supported deposit options, and click on the Paxos Gold or PAXG to receive a unique wallet address. Copy the address and paste it into the PAXG withdrawal section of the wallet where you are hodling Paxos Gold. Now, enter the amount of PAXG you wish to withdraw and click on the withdraw button. You will receive PAXG in your interest account soon.
- Start Earning Interest
Depending on the platform you choose, you will begin earning interest on Paxos Gold within a few hours. Once you receive PAXG in your interest account, you don't have to do anything else. The interest accruals will begin automatically.
Why Earn Interest on Paxos Gold?
The most prominent reason behind earning interest on Paxos Gold is that you will be multiplying your profits by doing so. Keeping PAXG in a wallet is not an effective way as it will remain idle in your wallet. Thus, it is better to earn interest on Paxos Gold than to keep it in your wallet. The interest that you can earn on Paxos Gold is also more than what many banks in the western world offer on fiat currencies like the USD, EUR, etc.
- Easy Process
To begin earning interest on PAXG, you have to go through a simple 3-step process. It involves signing up for an interest account, completing the KYC process, and depositing PAXG into your interest account. That's it! The internet accrual will begin automatically.
DeFi platforms make the process even easier than the centralized interest account providers. They don't require users to sign up for an account and nor do they ask for completing the KYC process. All users have to do is connect their wallet to the platform and deposit PAXG. That's it.
- Low Risk
Compared to the other high-interest paying options available out there, earning interest on PAXG is better as far as the degree of risk goes. Interest account providers share a part of their income with their interest account holders, which they earn by lending cryptocurrencies and fiat currencies. As their main business involves lending, there is a risk. But most of the interest account platforms require borrowers to over-collateralize for obtaining loans from them. It helps them manage the risks involved.
- Passive Income
Do you want to earn even while you are asleep? Well, that is possible if you begin earning interest on Paxos Gold. Relax and see your crypto wealth grow.
Where can I earn Interest on Paxos Gold?
There are limited options available to earn interest on PAXG. But from all available options, YouHolder and Celsius Network are best.
With YouHodler, you can earn 8.2% interest APY on a PAXG deposit. It is the highest interest rate available on Paxos Gold. YouHodlers pays the interest earnings every week. You are also free to withdraw at any time as YouHodler does not mandate keeping your funds locked for earning interest on it.
Celsius Network is one of the top names in the crypto lending space. It offers interest accounts on a long list of crypto assets, including Paxos Gold. With Celsius Network, you can earn interest up to 6.92% on Paxos Gold. But to earn the highest interest rates advertised, you must meet their criteria. First, you must agree to be paid interest payout in Celsius Network's native token CEL.
If you are from the United States & its territories, you cannot receive interest payout in CEL tokens. This rule automatically disqualifies the US residents from earning the 6.92% interest on PAXG. They can only earn interest payout in the token that they deposit. It means that the US residents will receive the interest payout in PAXG if they are depositing PAXG. It is known as in-kind rewards, which is 5.92% on Paxos Gold. Any international residents that don't want to receive interest payout in CEL tokens will also receive 5.92% interest on their PAXG deposit.
Is it Risky Earning Interest on Paxos Gold?
Though the risk factor is less in earning interest on Paxos Gold, we cannot ignore the risks involved. It is better to know about the risks in detail. The interest account providers earn money by lending cryptocurrencies and fiat currencies to borrowers. They offer a part of their income to their interest account holders in the form of interest. They also use their user funds for lending.
Most of the interest account platforms have mandatory over-collateralization for borrowers. But some take a different approach to stand out from their competitors. Thus, they do not ask for over-collateralization. If users opt for such a platform to earn interest on PAXG, their funds will be at higher risk.
If their borrowers start defaulting on loans and, at the same time, their collateral loses value, the platform will fail to recover the loaned amount. It may result in a situation where the platform cannot pay interest to their interest account holders. If the number of loan defaults becomes bigger than what the platform can manage, the platform can even go bankrupt. Bankruptcy can result in the interest account provider failing to refund its interest account holders.
Most of the interest account providers have indeed insured user funds today. But is it enough or not will depend on the amount of user funds lost and the insurance amount. If the user funds lost are higher than the insurance funds, the interest account holders will only receive back a part of their user funds.
You must research platforms in detail to earn interest on PAXG safely. To know about the platforms, you can also read our honest reviews on almost every major interest account provider.
What to Look for While Choosing a Platform?
Choosing a platform is the most crucial part of earning interest on Paxos Gold safely. The two most important factors are the interest rates and how long the platform has been in the industry. Don't neglect any of these two factors as both of them are equally important.
Many new platforms will offer the highest interest rates, but it doesn't mean they are credible. So, do not get lured by the high-interest rates alone. Longevity in the industry denotes that the player has a good reputation in the industry. Hence, choosing a platform that offers better interest rates and has been in the industry for considerably a longer period is a good choice to opt for.
You must also check if a platform has insured its user funds or not. It is a crucial factor. If a platform loses its user funds to a black swan event like hacking or if the platform goes bankrupt, the insurance company will step in and pay the insurance amount to the interest account provider. The insurance funds will go to the users to cover the losses they had to face.
Another factor to check is the eligibility criteria that a platform has for earning the highest interest rates it offers. Many interest account providers require their users to accept interest payments in their native tokens. Some will ask their interest account holders to lock in their funds for a specific duration, during which the user cannot withdraw the funds.
Also, check if the platform requires its users to deposit any minimum amount of cryptocurrencies to begin earning interest. If they do, you won't earn interest on your Paxos Gold until you deposit equal to more than the minimum deposit limit.