# PAXG Risk Addendum {% hint style="info" %} Operator and jurisdiction: BASIS is operated by BASIS DIGITAL INFRASTRUCTURE LTD, a Seychelles IBC (LEI: [254900IX2F2KCWNSSS64](https://lei.bloomberg.com/leis/view/254900IX2F2KCWNSSS64)). Research Partner: Base58 Labs contributes execution research, systems modeling, and risk design. {% endhint %} PAXG introduces additional risk surfaces beyond BTC, ETH, and SOL. This addendum is intended for users who want explicit failure-mode coverage. {% hint style="warning" %} Non-negotiable reminder Tokenized real-world assets are not risk-free gold. They are financial instruments with issuer, custody, legal, and operational dependencies. {% endhint %} ## 1) Issuer and custody risk PAXG is a token issued by an external issuer, not by BASIS. Risks include: * issuer operational failure * custody failure * audit or attestation failure * legal or regulatory action affecting issuer operations * redemption policy changes BASIS does not control these risks. BASIS can only: * monitor issuer disclosures and market signals * incorporate those signals into eligibility, sizing, and exposure limits * pause PAXG-related activity when uncertainty rises ## 2) Administrative control risk Some token contracts may include administrative controls such as freeze, blacklist, pause, or upgrade functions. If such controls exist, they introduce tail risk, including: * inability to transfer * inability to redeem * sudden changes in token behavior * unexpected restrictions on specific addresses or flows BASIS assumes conservative posture around this category of risk and may maintain tighter exposure and monitoring thresholds for PAXG than for other supported assets. ## 3) Redemption and operational constraints Tokenized gold redemption can involve constraints such as: * minimum redemption size * identity verification requirements * fees * processing delays * jurisdictional or counterparty restrictions These constraints matter during stressed conditions because the reference value may not be enforceable immediately through normal arbitrage activity. ## 4) Market liquidity risk PAXG liquidity can vary materially by venue and by time. Liquidity risk affects: * slippage tolerance * unwind capacity * execution feasibility * cross-venue routing quality * structural alpha capture under stressed market conditions BASIS applies deterministic execution controls and may enforce: * minimum depth thresholds * venue concentration limits * stricter routing filters * temporary suspension of selected strategies ## 5) On-chain risk Because PAXG operates on Ethereum, on-chain activity introduces additional risks, including: * gas spikes * network congestion * execution precision deterioration under volatile block conditions * smart contract integration risk through external pools or protocols During congestion or elevated operational uncertainty, the system prioritizes safety by reducing exposure, narrowing execution conditions, or disabling selected on-chain modules. {% hint style="info" %} PAXG deposits and withdrawals require a connected Web3 wallet such as MetaMask. BASIS supports same-token 1:1 swap functionality only, including PAXG → stPAXG. {% endhint %} ## 6) Peg deviation and valuation risk Even if PAXG references gold, market prices can deviate from expected valuation ranges. Deviation can be caused by: * liquidity constraints * redemption frictions * sudden demand shocks * issuer-related uncertainty * venue fragmentation BASIS may apply peg deviation thresholds that: * reduce module activity * halt selected activity * trigger internal control responses and de-risking logic ## 7) Infrastructure and execution risk PAXG strategy performance depends not only on market conditions but also on routing, timing, and infrastructure state. BASIS manages this through: * deterministic execution policies * math-constrained position logic * state machine risk controls * proprietary routing infrastructure * BHLE architecture with sub-50μs latency and 100K+ OPS handling capacity These controls are designed to improve execution precision and reduce avoidable operational variance. They do not eliminate issuer, custody, or market structure risk. ## 8) What users should do Before using PAXG-related functionality: * read the full Risk Disclosure * understand issuer and redemption dependencies * understand Ethereum transaction costs and operational constraints * test with small allocations first * verify wallet connectivity and address handling before transfer * understand that rewards, when applicable, accrue in real time as stPAXG within the Staking Wallet ## Operational notes | Item | PAXG | | --------------- | ----------------------- | | Deposit method | Connect Web3 wallet | | Withdraw method | Web3 wallet withdrawal | | Swap support | PAXG ↔ stPAXG only, 1:1 | | Funding Wallet | Holds native PAXG | | Staking Wallet | Holds stPAXG | | Deposit fee | 0% | | Withdrawal fee | 0.05% | | Swap fee | 0.01% | | Withdrawal time | 1–6 min | *** Trust is earned by defining how the platform behaves when tokenized gold markets become stressed, not by presenting gold exposure as inherently safe. {% hint style="success" %} BASIS risk architecture is grounded in deterministic execution, mathematical constraints, and explicit control-state transitions. Research support is provided through Base58 Labs, serving as a Research Partner for infrastructure and strategy research. {% endhint %} --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.basis.pro/paxg-integration/risk-addendum.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.