Paxos International, a UAE-based entity of Paxos, has launched a yielding stablecoin called Lift Dollar (USDL), with Argentina as its first market.
“USDL is issued permissionless on Ethereum and pays a daily programmatic yield to token holders based on reserve assets fully backing the total value of USDL in circulation,” Paxos International said on Wednesday.
USDL is collateralized one-to-one against the U.S. dollar, holds only the “highest quality liquid assets” including U.S. dollar deposits, short-term U.S. Treasury bonds and cash equivalents, and is regulated by the Financial Services Regulatory Authority (FSRA). Paxos International of Abu Dhabi Global Market (ADGM) announced.
USDL allows users to earn returns that are “truly risk-free,” Charles “Chad” Cascarilla, Paxos International board member and Paxos co-founder and CEO, told The Block. Cascarilla said Paxos International is a “cautionary company” that does nothing other than issue stablecoins. “If anything happens to Paxos, those assets will not be part of the bankruptcy process and will be immediately returned to investors,” he said. “
USDL first launched in Argentina
Paxos International first launched the USDL stablecoin in Argentina with cryptocurrency platforms Ripio, Buenbit and TiendaCrypto as distribution partners.
Ronak Daya, head of product at Paxos, told The Block in an interview that users can currently earn a yield of around 5% on USDL, which is close to the current effective federal funds rate (EFFR). Paxos International uses rebasing technology to distribute returns, and Daya said users’ USDL holdings will increase daily based on the returns.
Paxos International will charge a 20 basis point distribution fee and a 30 basis point issuer fee and pay the remaining profits to users, Daya said, noting that it will waive the issuer fee during USDL’s initial promotional period.
USDL is not available in the United States and some other jurisdictions.
USDL is not available to residents of certain jurisdictions, including the United States, UAE excluding ADGM, United Kingdom, European Union, Canada, Hong Kong, Japan, and Singapore. Cascarilla said that yielding stablecoins could be considered securities by the U.S. Securities and Exchange Commission. This is why the main player, Paxos, does not offer yields on existing stablecoin products such as Pax Dollar or USDP.
“Stablecoins are essentially about helping the unbanked and underbanked people who don’t have access to dollars for a variety of reasons,” Cascarilla said, adding that USDL will target that audience globally for future launches. I mentioned it.
“We believe the stablecoin market will grow 20x from now over the next five years, capturing a significant portion of future growth and taking market share away from incumbents,” Daya said.
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