Digital asset lender Nexo has introduced a PAX Gold (PAXG) credit line for retail clients.
Nexo’s management noted that it will allow all investors to use the PAXG token as a collateral option. This offering was only available for the company’s institutional clients.
PAXG is an ERC-20 compliant token developed on the Ethereum (ETH) blockchain. PAXG tokens are reportedly backed by one troy ounce of a 400 troy ounces London Good Delivery gold bar, which are kept securely in Brink’s vaults.
In statements shared with The Block, Antoni Trenchev, co-founder and managing partner at Nexo, said that all customers may easily purchase gold and borrow against it.
“With Nexo and PAXG, you can invest in physical gold, represented by the PAXG token. You can then pledge your tokens as collateral and get 70% of the investment amount as a loan with an annual percentage rate (APR) starting at 5.9% and buy even more gold.”
He noted that the offering is now available to the firm’s retail investors because there has been significant demand for the product.
“Especially in high-volatility times, as in the present, gold is sought after by many of our retail clients.”
Responding to a question about how many institutional investors have been using the product, Trenchev claims “several dozen.”
Nexo claims more than 650,000 users, which reportedly include institutional and retail clients.
Nexo bought $5 million worth of PAXG tokens last year. The company also introduced a token for its “Earn Interest” product in order to pay customers as much as 8% interest per annum on gold.
Michael Arrington, founder of TechCrunch, has made strategic investments in Nexo. He also serves as the company’s advisor.
In 2018, Nexo secured $52.5 million in funding via a private token sale.