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3rd Party: 07 June 2024
Paxos Encourages Broad Stablecoin Adoption & Industry Expansion with New Model where Holders Directly Benefit from Yield Earned on Reserves
Launch Follows Paxos’ Track Record of Leading Stablecoin Innovation for Financial Industry Leaders
Paxos International, a UAE-based affiliate of Paxos, today announced the launch of a yield-bearing stablecoin – Lift Dollar (USDL). Issued by Paxos International, a regulated entity under the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), USDL will be available to consumers in eligible global markets. Paxos International will partner with global exchanges, wallets and platforms to distribute USDL to individuals and institutions.
USDL is unmatched in the market as holders earn overnight yield from short-term, high quality liquid US government securities and cash equivalent reserve assets held under the safe protection and custody requirements of the FSRA. This reserve structure is like other Paxos-issued US dollar stablecoins that are backed 1:1 in value. USDL is issued permissionlessly on Ethereum and pays yield programmatically on a daily basis to token holders, subject to the reserve assets fully backing the total value of USDL in circulation. USDL marks an important innovation in democratizing overnight yield by shifting interest earned on stablecoin reserve holdings directly to eligible end holders from the central issuer. This follows Paxos’s proven history of building blockchain solutions for financial institutions and industry leaders.
Using an Ethereum smart contract, USDL distributes the yield generated from its reserves to eligible wallet addresses daily without requiring any additional steps by the token holder. This results in a seamless experience for token holders as their USDL wallet holdings increase every day. Paxos will retain an issuer fee and pay out the remaining yield earned based on prevailing daily market conditions. Companies in permitted jurisdictions interested in enabling USDL on their platforms can onboard with Paxos International.
Charles Cascarilla, Member of the Board of Directors of Paxos International, said: “Paxos is committed to revolutionizing the global financial markets through reliable, trusted and regulated blockchain offerings. The digital asset ecosystem has evolved to create mechanisms for token holders to earn yield on stablecoins, but these options are high-risk, opaque and have led to the failure of numerous firms. USDL is a first-of-its-kind—a regulated product, earning and paying safe yield on a daily basis. Until now, only centralized issuers have benefitted from the economics of stablecoin reserves. Paxos International has reimagined this dynamic so that all token holders can safely use and grow their regulated USD stablecoin holdings. Our vision is a more democratic, inclusive and accessible financial market. USDL is a pivotal step towards achieving that goal.”
The FSRA is recognized for its robust regulatory framework and commitment to fostering innovation in financial services. Under FSRA’s license, Paxos International is required to hold only high-quality liquid assets to back USDL - US dollar deposits, short duration US treasuries and cash equivalents. It is required to ensure that USDL will maintain 1:1 parity with the US dollar and consumers can redeem their tokens for fiat at all times.
Ronak Daya, Head of Product at Paxos, said: “Lift Dollar is the first stablecoin designed to benefit both end users and distributors in a safe manner. Through Paxos International, eligible users around the world can access USDL directly through secure channels managed by trusted partners and watch their holdings grow daily in their wallets. Paxos International leverages a technical mechanism called rebasing to seamlessly distribute yield to users’ wallets. We are excited for the opportunities this will create for businesses and individuals. We look forward to growing our partner network globally this year.”
Paxos has a strong track record of building blockchain technology to power offerings for financial industry leaders. Its digital assets include PayPal USD (PYUSD), Pax Dollar (USDP) and Pax Gold (PAXG) regulated by the New York Department of Financial Services, each of which provides partners and users a quality, 1:1 asset parity overseen by the highest levels of regulatory oversight. The company is the trusted partner for enterprises around the world to tokenize, custody, trade and settle assets.
Arvind Ramamurthy, Chief of Market Development at ADGM, said, “ADGM extends congratulations to Paxos International on receiving approval to issue its yield-bearing stablecoin, Lift Dollar (USDL) to select global markets. This achievement underscores the industry's growth and innovation in the UAE and the wider region, made possible through FSRA's progressive and credible regulatory oversight. We anticipate the continued growth of USDL and eagerly await the innovative products that Paxos International will introduce in this ever-evolving and dynamic digital asset market."
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