Deribit Eyes Growth In Asset-Backed Crypto With Pax Gold Debut

Crypto derivatives exchange Deribit is building on the success of its recent addition, Pax Gold, as it explores expanding into asset-backed crypto products.

Within its first week, PAXG trading on Deribit exceeded $250 million in notional value, signaling strong interest in gold-backed tokens among traders, according to company executives.

In an interview with Benzinga, Shaun Fernando, Chief Risk Officer and Head of Product Strategy at Deribit, described the debut as aligned with market demand.

"There's significant overlap between gold and crypto traders," he said, adding, "PAXG provides stability and flexibility, making it a natural fit for our platform."

PAXG, backed 1:1 by LBMA-accredited gold reserves, offers traders several advantages, including 24/7 trading, no management fees, and reduced transaction costs compared to traditional gold ETFs, he said.

Fernando highlighted PAXG's role in addressing inflation risks and its potential as a stable collateral asset. "It's a much more stable asset," he noted. "You can use it as a cross-collateral coin while hedging your inflation risk."

The success of PAXG has also prompted Deribit to consider other high-value asset-backed products.

CEO Luuk Strijers emphasized the company's focus on quality in product expansion.

"We focus on quality, not quantity," Strijers said. "Our goal is to provide long-term value by identifying assets with real demand and stability."

Strijers also pointed to PAXG's utility within Deribit's ecosystem, particularly its role as cross-collateral.

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"Traders can use gold to hedge risk while maintaining liquidity for other strategies, something not possible with traditional gold products," he explained.

This functionality allows traders to diversify their portfolios and manage market risks more effectively.

Fernando pointed out that gold's unique characteristics as a stable asset make it particularly appealing to traders seeking diversification.

"Gold has moved 27% year to date, showing significant activity driven by factors like Federal Reserve actions and geopolitical tensions," Fernando said.

Strijers added that the decision to prioritize gold-backed tokens was based on their proven demand and utility.

"We are not just adding products for the sake of it. PAXG fits well with our focus on high-quality assets that provide long-term value," he said.

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