Blockchain technology is revolutionizing the digital world and enabling game-changing innovations in the crypto space, including the emergence of stable coins like the pax dollar USDP. Pax dollar is one of a few fully regulated stablecoins designed to limit volatility and provide peace of mind to crypto investors seeking stable returns and consistent long-term growth as part of the Paxos ecosystem.
In this article we’ll take a look at what the pax dollar stablecoin USDP is, the Tokenomics of pax gold token or pax g go over the compliance and regulation standards for each, and of course, share my thoughts on it.
What is Paxos?
Paxos is a blockchain ecosystem that houses a variety of fully regulated cryptocurrency products for individual traders as well as institutional and enterprise customers looking for safer less volatile exposure to cryptocurrency markets. Paxos is an umbrella platform that hosts both the pax dollar stablecoin and the pax gold token. It’s one of the only fully regulated blockchain ecosystems.
Paxos aims to provide a seamless global payment system that serves to minimize the risks associated with market exposure and it offers complete transparency and security surrounding the assets that back its USDP stablecoin.
Vision of Paxos
The Paxos team envisions a progressive future in which blockchain technology is not only a driving force behind a financial revolution but also an important component of its evolution. Paxos aims to solve problems and improve the performance of the economic ecosystem by establishing a fluid frictionless global exchange system for both digital and real-world assets via the widespread use of its stablecoin pax dollar.
Cedar hill capital partners co-founder Charles cascarilla and principal analyst rich Tayo founded Paxos trust company LLC formerly known as I bit in 2012. Paxos entered the u.s market and launched its USDP stablecoin in May 2015 after receiving licensure from the new york state department of financial services, led by former u.s senator and senate finance committee member bill Bradley and former federal deposit insurance corporation or FDIC chairman sheila bear.
The name Paxos was inspired by the legislative consensus system that is popular on the greek island of Paxos. Despite its age, this system inspired the Paxos founders who used the concept of computational consistency to create the pax stablecoin token later known as the pax dollar or USDP. The pax dollar which is backed by the US dollars in accounts held at u.s depository institutions was launched in September 2018 and was rebranded as the USDP stablecoin in august 2021.
Shortly after the pax gold token which is linked to the value of gold rather than us dollar was introduced to tokenize gold and provide customers with fractional ownership of the precious metal. Paxos’s current partners include major corporations and organizations from around the world such as PayPal, society Generali, Credit Suisse, Revolut, and Stonex to name a few.
Paxos developed and launched pax dollar in 2018. Three years after obtaining a trusted charter for digital assets from the new york state department of financial services. Unlike other cryptocurrencies pax dollar is fully regulated and backed entirely by cash reserves, providing investors with exposure to crypto without the volatility that is typically associated with it. Pax gold was released one year after the pax dollar. It became the first crypto asset redeemable for physical gold after receiving full approval from the new york state department of financial services. Pax gold has made it extremely simple for anyone to invest in actual gold, trade gold with minimal settlement risk, and exchange pax g tokens for both gold and fiat currency by tokenizing the precious metal on the blockchain.
What is the Pax Dollar?
Pax dollar or USDP is an erc20 stablecoin that is backed by the united states dollar. Pax dollar is collateralized one to one by USD and is one of the most active crypto projects as well as one of the only stable coins approved by wall street regulators to provide access to blockchain-based assets with minimal price risk. In 2021 Paxos renamed the formerly known Paxos standard token or pax to pax dollar. Pax dollar is a borderless stablecoin designed for a variety of applications including commerce, trading, peer-to-peer transfer, and holding as an investment and store of wealth. Paxos has been producing the industry-leading pax dollar token since 2021. Using blockchain technology and issued as ERC20 tokens developed on the Ethereum network to help mitigate crypto volatility, hedge inflation, eliminate cross-border transaction fees and issue payment for blockchain-based assets.
While several other stablecoins have been chastised for a lack of transparency regarding the assets that underpin them pax dollar remains one of the most regulated and recognized stablecoins in the entire crypto industry.
How does Pax Dollar Works?
The pax dollar or USDP is intended to enable anyone, anywhere to send and receive US Dollar-based assets with significantly greater availability and flexibility than traditional financial sector instruments. Furthermore, the fees charged for using Paxos to buy, sell and trade USDP are significantly lower. Pax dollar allows you to transfer assets across borders almost instantly and with no discriminatory requirements. In other words, by utilizing blockchain technology Paxos is aiding people and breaking free from the shackles of financial enslavement by providing a stable decentralized value asset with minimal risk.
To exchange USD for pax dollars you must first deposit USD into a Paxos account, whether for transactional or investment purposes. Paxos will then use their Smart Contract to generate USDP in the amount of your deposit. As a result, the newly minted USDP will be transferred to and held in your account.
Exchanging USDP for USD is just as simple, in fact, it’s the same. The pax coins on the other hand are instantly burned and removed from circulation after being converted from USDP to USD. Unlike many other cryptocurrency platforms, Paxos does not charge a fee for USDP conversion and redemption. All USDP stablecoin cash equivalents and reserves are kept in secure accounts and are redeemable for us dollars at any time.
Pax Dollar’s key characteristics
Pax dollar provides crypto traders and investors with a number of key features designed to reduce risk and maximize stability.
Pax dollar is inherently more secure than most other cryptocurrencies and stablecoins on the market today because Paxos is a regulated trust. Transactions can be executed quickly and securely with zero risk with legal permission to transfer assets using blockchain technology additional transaction monitoring and the use of surveillance partners for an additional layer of compliance. Furthermore, Paxos adheres to open zeppelin’s possible contract module, which helps minimize risk by utilizing Ethereum smart contract libraries that have been tested.
This means that whenever a security threat is detected the Paxos platform can halt USDP approvals and transfers. Every pax dollar that is regulated must operate under the strict regulatory supervision of the new york state department of financial services. As a result, USDP stablecoin users can be confident that their insured crypto assets are in compliance with the highest standards of consumer protection. Cryptocurrency in general will grow in both usage and value as decentralization becomes more prevalent over time. However, knowing that the pax dollar is backed by the world’s largest fiat currency us dollar is reassuring.
According to Paxos with them, a reputable us-based auditing firm that reviews pax dollars on a monthly basis, they must ensure that the supply of USDP matches the reserve supply of u.s dollars that Paxos must maintain in order to maintain its highly regulated stablecoin status each month. As previously stated the pax dollar is backed one-to-one by us dollar. As a result for every pax dollar issued one dollar is held in an account to ensure its value. In this regard, it’s similar to the gold standard that the united states used to back the dollar until 1971.
Bankruptcy Remote Accounts
Likewise, as a regulated trust chartered by the new york state department of financial services Paxos is required by law to keep the cash equivalent of all stablecoin reserves in fully segregated bankruptcy remote accounts. This requirement ensures that USDP stablecoin holders can always redeem their investments in u.s dollars or their reserve currency and access their funds because Paxos corporate funds are kept separate from token holders’ funds. There’s no need to be concerned about their solvency, you’ll always be able to access your funds even if the company declares bankruptcy.
As previously stated Paxos keeps its required reserves in cash to ensure that customer funds are safe and always available for redemption. The accounts are audited monthly by Withham, a reputable third-party firm to ensure that everything is in order. Anyone, anywhere, at any time can instantly purchase or redeem pax dollars with nothing more than a smartphone, you don’t even need a bank account to get started.
USDP vs PAXG
If you value stability and security over profit potential, Paxos’s USDP stablecoin is an intriguing option. Pax gold the company’s other crypto token is also intriguing. The PAXG token digitally represents one true ounce of gold stored in London’s high-security brink’s vault. This is an intriguing possibility for those looking to acquire physical gold. The PAXG token not only allows you to do so but also combines with it the liquidity of crypto with the security and immutability of blockchain technology. For many, it’s a win-win situation.
As an erc20 token built on the dependable Ethereum blockchain PAXG can be moved or traded anywhere in the world as well as converted and redeemed in fiat currency or physical gold. PAXG like USDP is audited each month to ensure that its token supply corresponds to the gold assets held in its vaults. If that isn’t enough each token holder’s gold is assigned a unique serial number allowing you to trace your token back to the actual physical gold backing it. With today’s uncertain economic conditions gold’s safe haven status is more visible than at any time in history.
In other words with the release of pax g in February 2021 Paxos may have struck gold. Over the course of a little more than a year the token’s market cap increased by more than 400 percent outpacing the market cap growth of tether gold by more than 150 percent.
Applications of Pax Dollar
The pax dollar was created with the intention of having a growing number of use cases. Today stablecoins are primarily used to reduce the friction associated with cross-border transactions and to serve as a reliable means of payment for crypto NFTs and other blockchain-related assets. Paxos anticipates that in the not-too-distant future USDP will be used by consumers to make payments and held as a safe store of value. Not just for u.s token holders but for people all over the world.
In terms of USDP Tokenomics Paxos trust company LLC is the only entity with the ability to change the supply of pax dollars in circulation. The number of tokens that the company can create is unlimited. Having said that new tokens are only issued when dollars are deposited into Paxos accounts. When USDP is redeemed for cash from one of the segregated accounts the tokens are immediately destroyed to ensure price stability and that the number of tokens in circulation corresponds to the amount of us dollars held in reserve. This is how it keeps its one-to-one price ratio Withham audits Paxos on a monthly basis and publishes reports detailing the company’s us dollar reserves and the number of tokens in circulation.
Is it wise to invest in Pax Dollar?
Given the level of trust and credibility that Paxos has received from traditional institutions such as the bank of America, Credit Suisse, PayPal, and MasterCard it’s safe to say that the company’s regulatory approach has paid off. Indeed as regulators around the world attempt to decipher cryptocurrencies, the pax dollar may hold the key to cryptocurrency’s mainstream adoption. The pax dollar is currently ranked seventh on the list of stablecoins with the largest market caps. However, its 400-plus growth in just over a year suggests it may be climbing the ranks. Overall Paxos’s ethos of providing security, honesty, and complete transparency in backing up USDP with both au and USD makes the pax dollar stablecoin a more appealing investment vehicle for many people.
Pax dollar is a safe and stable way for investors with low-risk appetites to invest in cryptocurrency markets. As a pax token holder, you can rest assured that you can exchange USDP for u.s dollars at any time. This backing along with its charter and compliance with regulatory bodies makes the pax dollar a viable hedge against dollar inflation, economic uncertainty, and crypto risks.
I hope you got value from this video and have a better understanding of what pax dollar is the difference between USDP and PAXG, and each of their use cases. Do you think pax Stuller can overtake Tether or USDC? Leave a comment below.