In response to growing public acceptance of decentralized finance (DeFi), the virtual currency trading platform MaiCoin has expanded its offerings. Following the listing of popular DeFi tokens Dai and LINK in October, MaiCoin added the equally noteworthy DeFi token COMP on November 10. At the same time, it also listed PAX Gold (PAXG), a token pegged to the price of gold.
Understanding COMP and Its Role in DeFi
COMP is the governance token issued by Compound, a decentralized financial service platform built on Ethereum that provides virtual currency lending services. Users can think of Compound as a liquidity pool where they can either borrow or lend funds. Lenders deposit funds into the pool to earn interest, while borrowers can take out loans by over-collateralizing other cryptocurrencies.
Holding COMP grants the right to have a say in the operation of the Compound platform, including making proposals and voting. For example, token holders can vote on which new tokens should be listed on Compound for lending. Therefore, factors such as the platform’s market penetration, the presence of competitors offering similar services, and the success of its token governance model can all influence the value of COMP. In general, the current value of the COMP token depends on how many people in the market want to have governance rights in the Compound platform.
What Is PAX Gold (PAXG)?
PAX Gold (PAXG) has a straightforward concept: it is a gold-backed token. Each PAXG token represents one fine troy ounce of a London Good Delivery gold bar stored in professional vault facilities in London. Its price is directly linked to the real-time market price of gold.
For Paxos, the company issuing PAXG, the biggest challenge is building public trust in the idea that "buying one PAXG is equivalent to buying one ounce of physical gold." Paxos states: "PAXG is approved and regulated by the New York State Department of Financial Services (DFS). PAX Gold is fully backed by allocated gold bars stored in vaults. Paxos Trust Company engages Withum, a US-based auditing firm, to independently verify that the total supply of PAXG matches the amount of gold held in the vault."
Users in Taiwan can refer to reliable bank gold price quotes to confirm whether PAXG’s price moves in tandem with the gold market. Compared with holding physical gold, owning gold in token form offers the speed and liquidity of digital asset trading, eliminating the need to personally trade gold bars at jewelry stores.
MaiCoin’s Growing DeFi and Asset Token Offerings
MaiCoin now offers three popular DeFi tokens—COMP, Dai, and LINK—providing a convenient channel for users to participate in decentralized finance. At the same time, recognizing that many people in Taiwan view gold as a tool for value preservation and hedging, MaiCoin has also listed the easily tradable gold token PAXG. By offering various types of tokens, MaiCoin aims to promote virtual currency adoption among users with different needs.
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Frequently Asked Questions
What is a DeFi token?
DeFi tokens are digital assets associated with decentralized finance platforms. They often serve purposes such as governance, lending, borrowing, or providing liquidity within a blockchain-based ecosystem.
How is PAXG different from owning physical gold?
PAXG offers digital ownership of physical gold, making it easier and faster to trade while providing liquidity. Unlike physical gold, it doesn’t require storage or security arrangements, and transactions can be completed online.
Why would someone hold COMP tokens?
Holding COMP tokens allows participation in the governance of the Compound platform. Token holders can propose and vote on changes, influencing the platform’s development and policies.
Is PAXG regulated?
Yes, PAX Gold is approved and regulated by the New York State Department of Financial Services. It is regularly audited to ensure that the token supply matches the actual gold reserves.
What makes tokens like COMP valuable?
The value of governance tokens like COMP is driven by demand for participation in the platform’s decision-making process, the utility of the platform, and overall market adoption.
Can PAXG be used for everyday transactions?
While PAXG is primarily designed as a store of value and medium for gold investment, it can be traded or transferred like other digital assets, offering flexibility for users who want exposure to gold without physical handling.