RWAs leverage covered-call vaults to enhance tokenized gold income
Enhanced has launched the PAXG Volatility Income/Yield Vault, an on-chain structured product designed to generate income from tokenized gold. By depositing PAXG, a gold-backed token issued by Paxos, users participate in an automated covered-call strategy that sells bi-weekly out-of-the-money options to institutional market makers. This process targets annualized returns between 4% and 14%, distributing premiums in USDC every two weeks. The vault aims to solve the traditional issue of gold being a non-yielding asset, effectively turning a store of value into a productive investment. By utilizing smart contracts and a competitive request-for-quote auction, the protocol reduces costs to approximately 0.5% annually, undercutting traditional financial products like the GLDI ETF. This development is significant for the $5 billion tokenized gold market, as it provides a transparent, accessible way for investors to monetize their holdings during periods of moderate volatility. While the strategy caps potential upside during sharp rallies, it offers a new mechanism for compounding gold positions through automated premium reinvestment.