[ARFC] Onboard PAXG to the Global Dollar Hub in Aave V4 Ethereum

Governance
1

Summary

This proposal seeks to onboard Pax Gold (PAXG) to the Global Dollar Hub on the Aave V4 Ethereum instance. Final asset configuration will be determined by the Risk Service Providers.

Motivation

PAXG is an ERC-20 token issued by Paxos Trust Company, where each unit represents one fine troy ounce of a London Good Delivery gold bar held in professional vaults. Redemption and custody are administered by a regulated issuer, and holdings are subject to periodic third-party attestations.

Onboarding PAXG to the Global Dollar Hub is aligned with the DAO’s long-term objectives in several ways:

  • It introduces a gold-backed, real-world asset to the Aave V4 Ethereum instance, broadening the range of collateral and liquidity available beyond dollar-denominated exposures.
  • It gives users access to a regulated, physically-backed representation of gold within the Aave ecosystem, supporting demand from institutional participants and DeFi protocols seeking commodity exposure.
  • It complements the Global Dollar Hub’s existing composition, adding a non-correlated asset that strengthens the instance’s position as a venue for diversified liquidity strategies.

Specification

This proposal adds PAXG to Aave V4 Global Dollar Hub in Ethereum

Token Address: 0x45804880De22913dAFE09f4980848ECE6EcbAf78

Risk Parameters and final configuration will be updated by Risk Service Providers and ARFC will be updated accordingly.

Useful Links

Disclaimer

This proposal was prepared by Aave Labs in its capacity as a contributor to the Aave ecosystem. Aave Labs has no financial relationship with Paxos Trust Company or any of its affiliates and has not received compensation from Paxos in connection with this proposal.

Next Steps

  1. Gather community feedback during the ARFC stage.
  2. Service Providers to post Asset Technical Assessment and Asset Risk Assessment.
  3. If the ARFC response is positive, escalate to Snapshot for off-chain confirmation.
  4. Execute the corresponding transaction through the V4 Security Council to onboard PAXG to the Global Dollar Hub on the Aave V4 Ethereum instance.

Copyright

Copyright and related rights waived via CC0.

5 Likes
2

Aave Labs for driving the Aave V4 and Global Dollar Hub vision and for bringing this PAXG onboarding forward.

One quick process point: it’s not fully clear who owns the high‑level asset strategy for the Hub Aave Labs, the Risk Service Providers, or the DAO via a formal framework. Before we add more assets, I’d really like to see a governance‑endorsed “Global Dollar Hub asset policy” that clarifies the intended scope of assets, issuer concentration limits, and basic liquidity/oracle standards.

I’m supportive of the diversification angle here; my comment is mainly about keeping portfolio construction transparently DAO‑driven rather than implicitly steered by any single contributor.

3

Aave Labs is pleased to share that the technical assessment review for PAXG has been completed. The result is now available in the Risk Assets Assessments category for governance review, here.

1 Like
4

Summary

LlamaRisk supports onboarding PAXG to the Aave V4 Global Dollar Hub as a collateral-only reserve in the new Gold Spoke, at a 75% Collateral Factor with a 6.50% maximum dynamic liquidation bonus, with borrowing of the asset disabled through a zero draw cap and a conservative add cap, and with USDG as the spoke’s borrow side.

Support is conditional on the proxy admin moving behind a timelock, which Paxos confirmed is being implemented with rollout expected the week of August 17, 2026. The proposal also enables native USDG as a borrowable reserve on the Pendle Spoke.

PAXG is the regulated gold token of Paxos Trust Company, National Association, a national trust bank supervised by the Office of the Comptroller of the Currency since its conversion from a New York limited-purpose trust charter on December 12, 2025. Each token is title to one troy ounce of allocated London Good Delivery gold, with roughly 452,355 tokens outstanding against a reserve KPMG attested one-to-one as of June 2026.

The risk surface divides into four parts. $9.1 million of PAXG exits into USDG inside a 2.64% price impact, and the dominant on-chain pool rests on a single liquidity provider. PAXG is to be priced at gold spot through a Chainlink XAU/USD feed. The gap between the token’s own price and gold has been analysed: it stayed within 1% on 97.7% of days and reached a 2.0% premium and a 1.05% discount at its extremes. There is a recent audit attestation, a million-dollar bug bounty, and a cross-chain route verified on-chain whose worst-case unbacked mint is rate-limited at 4,440 PAXG per day. The upgrade path carries no timelock today, and freeze, wipe, and mint authority concentrate in the same keys. The custody arrangement behind them was disclosed under a non-disclosure agreement and viewed as sufficient by LlamaRisk, and reserve backing is attested monthly.

PAXG Risk Evaluation: Link

Aave V4 Global Dollar Hub Parameters

Aave V4 Specific Parameters

We recommend adding PAXG as a collateral-only asset to the new Gold Spoke. In parallel, to avoid additional governance proposals, we also propose enabling native USDG as a borrowable reserve on the Pendle Spoke with a 4,000,000 USDG Draw Cap.

Dynamic Liquidation Bonus Configuration

As a non-crypto open-market spoke, it merits more conservative liquidation restoration parameters. Draw Caps will be set conservatively to reflect the Gold Spoke’s still-developing borrow-side liquidity profile.

Spoke-level liquidation parameters:

Parameter Value Rationale
targetHealthFactor 1.20 Open-market non-crypto collateral dynamics require more conservative post-liquidation restoration than that of other Global Dollar Hub Spokes.
healthFactorForMaxBonus 0.90 Lower trigger avoids overpaying incentives too early while still reaching max LB before the deficit zone.
liquidationBonusFactor 0.80 Matches the Main Spoke baseline and preserves V3-equivalent Gold correlated asset bonus at HF~1 with a 1.25x max LB cap.

Spoke Parameters

Hub Spoke Reserve Collateral Factor Max Liquidation Bonus Borrowable Collateral Risk Liquidation Fee riskPremiumThreshold receiveShares
Global Dollar Hub Gold Spoke PAXG 75.00% 6.50% FALSE 0 10.00% 0 TRUE
Global Dollar Hub Gold Spoke USDG 0.00% - TRUE - - 0 TRUE
Global Dollar Hub Pendle Spoke USDG 0.00% - TRUE - - 0 TRUE

riskPremiumThreshold is set to 0 for all reserves, in line with other assets across V4, as risk premiums are not currently in use. receiveShares is enabled for all reserves.

Add and Draw Caps

Hub Spoke Reserve Add Cap Draw Cap
Global Dollar Hub Gold Spoke PAXG 2500 0
Global Dollar Hub Gold Spoke USDG 5,000,000 9,500,000
Global Dollar Hub Pendle Spoke USDG - 4,000,000

Oracle

List PAXG against the Chainlink XAU/USD price feed, pricing the token at underlying gold spot with no CAPO growth-ceiling wrapper. PAXG carries no monotonic exchange-rate growth for a cap to bound, so a CAPO adapter is not recommended. The accepted risks are a sustained token-level dislocation priced at full gold spot and the feed’s weekend staleness. The liquidation parameters set at any future collateral-enable phase must absorb that envelope rather than assume a continuously updating reference.

Disclaimer

This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.

The information provided should not be construed as legal, financial, tax, or professional advice.

5

The ARFC to Onboard PAXG to the Global Dollar Hub in Aave V4 Ethereum has been raised to snapshot. Voting will begin in less than 24 hours. You may vote here

6

The dedicated Gold Spoke and conservative initial parameters seem appropriate for introducing PAXG into V4. I particularly find the decision to avoid a CAPO wrapper interesting, since the risk assessment instead relies on the liquidation parameters to account for potential token-level dislocation and Chainlink weekend staleness. It will be useful to see whether the proposed 2,500 PAXG supply cap remains appropriate once actual liquidity and usage develop.