What is Commodity-Backed Stablecoin?

Commodity-backed stablecoins are pegged to the value of underlying commodity assets like gold, silver, or real estate. Holders of these stablecoins have a claim to their underlying assets. The most popular commodity-backed stablecoins are backed by gold. For example, each PAX Gold (PAXG) token is pegged on a 1:1 ratio to one troy ounce (t oz) of a 400-ounce London Good Delivery gold bar.