On-Chain Gold PAXG Open Interest Surpasses 80M on Hyperliquid, Sparking Perp DEX Funding Rate Discrepancies

On-chain gold token PAXG has seen its open interest exceed 80 million on Hyperliquid, according to recent monitoring data. This increase has led to discrepancies in the funding rates of perpetual DEX contracts. The phenomenon reflects heightened interest in tokenized gold as an investment vehicle within the DeFi ecosystem.

Whale activity in PAXG has surged amid the bullish price action in physical gold. The largest long position in PAXG, held by a whale with the address 0xfd6, has seen unrealized gains grow to $710,000. This corresponds to a return of approximately 96% based on the position's average entry price of $4,126. The whale's position size is now around $3.71 million, with a take-profit order set at $8,850. The whale has maintained only PAXG in its portfolio since opening the position in October 2024.

PAXG has followed the upward trajectory of physical gold, which recently hit an all-time high above $5,100 per ounce. The token's price closely mirrors the underlying gold price, reflecting its 1:1 backing by physical gold stored in professional vaults. This has made PAXG a popular asset for investors seeking exposure to gold without traditional barriers.

Why Did This Happen?

The surge in PAXG's open interest is tied to the broader rise in tokenized gold's market cap, which now exceeds $4 billion. PAXG and Tether's XAUT dominate 86% of the tokenized gold market. This trend indicates growing adoption of blockchain-based real-world assets (RWAs) among both institutional and retail investors.

Physical gold's rally has been driven by macroeconomic factors such as inflation hedging and geopolitical uncertainty. Tokenized gold offers 24/7 trading access, making it attractive for real-time price discovery. This feature has helped PAXG outperform the broader crypto market, which saw a 1.81% drop in the last 24 hours while PAXG rose 0.50%.

How Did Markets React?

PAXG's performance has been supported by increased trading volume, which has surged by 72.92% in the last 24 hours to $455 million. This rise in liquidity has reduced slippage and reinforced price stability during the rally. Institutional trust in PAXG has also been boosted by regulatory oversight from the Office of the Comptroller of the Currency (OCC), which now supervises the token.

Despite its recent gains, PAXG has experienced a minor pullback, dropping 0.85% to $4,841.28 over the last 24 hours. This decline was attributed to a whale liquidating a large leveraged position and a reduction in PAXG's collateral utility on Binance. The overbought technical conditions also contributed to the short-term correction.

What Are Analysts Watching?

Analysts are closely monitoring the correlation between PAXG and the price of physical gold. If spot gold maintains levels above $5,000, it would signal continued investor confidence in the token. Additionally, traders are watching for follow-up actions from other exchanges after Binance reduced the collateral ratio for PAXG.

The broader market is also assessing the impact of the increased PAXG open interest on DeFi protocols. The discrepancies in perpetual DEX funding rates suggest that market participants are adjusting to the new liquidity dynamics. This could have implications for how DeFi platforms manage leveraged positions and funding mechanisms in the future.

PAXG's recent price action and liquidity gains highlight the growing importance of tokenized assets in the crypto market. As more investors seek exposure to traditional commodities through blockchain, the demand for tokenized gold is expected to continue rising.