Tokenized gold reaches Base as Coinbase lists PAXG for loans

Tokenized gold has expanded to the Coinbase-incubated layer-2 network Base following the launch of Paxos's PAXG asset, opening up new lending possibilities for digital asset holders. Each full PAXG token represents a single fine troy ounce of physical gold held securely in custody, while fractional ownership allows users to gain exposure to smaller quantities of the precious metal.

Lending protocol Morpho announced that eligible users can now borrow USDC stablecoins against their PAXG collateral directly through the exchange application without needing to sell their tokenized gold for cash. While Paxos previously indicated that integration with Coinbase Borrow would roll out over subsequent weeks subject to product availability, Morpho confirmed the borrowing functionality went live immediately on the same day.

This new integration builds upon existing lending infrastructure on the network, following the earlier introduction of Morpho-backed Bitcoin loans on Base. However, access to these financial products remains subject to specific geographic and account restrictions. Coinbase limits its loan offerings to verified customers residing in Canada and the United States outside of New York, alongside restricted access in the United Kingdom. Furthermore, Paxos notes that the token itself is presently unavailable to residents of the European Union.

Borrowers can now use tokenized gold as collateral for stablecoin loans on the Base network.

Borrowing limits vary depending on the asset, and specific caps or rates for PAXG are not detailed on the public Borrow page. Loan health guidelines indicate that collateral prices for PAXG update during standard gold market hours, which run approximately twenty-three hours per weekday, and pause when those traditional markets close for the weekend. This pricing pause affects how quickly loan management interfaces reflect shifts in gold valuations.

Understanding loan health and liquidation rules

Loan-to-value ratios can rise if collateral values drop or if interest accumulates on the borrowed amount. When these ratios reach specific thresholds defined for each collateral asset, automatic liquidation can occur. Although the platform offers optional collateral top-up protection to help mitigate this risk, the exchange warns that liquidation remains possible even when protection features are enabled.

Why it matters

The integration of tokenized gold into decentralized lending markets offers holders a method to access liquidity without liquidating their physical metal exposure. For participants in supported regions, this development bridges traditional commodity assets with decentralized finance protocols on layer-2 networks. While it provides new utility for digital gold, users must navigate strict geographic limitations, unique valuation schedules tied to traditional market hours, and standard liquidation parameters.