Paxos International Introduces Yield-Bearing Stablecoin Lift Dollar (USDL)
Paxos International, a UAE-based affiliate of Paxos, has launched a pioneering stablecoin called Lift Dollar (USDL). This innovative financial instrument, regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), offers a unique proposition in the stablecoin market by providing holders with daily yield on their holdings. The USDL aims to democratize access to yield from stablecoin reserves, transforming the economic dynamics traditionally favoring centralized issuers.
USDL stands out in the stablecoin landscape due to its regulatory oversight and the high-quality liquid assets backing it. The FSRA requires Paxos International to maintain reserves comprising US dollar deposits, short-duration US Treasuries, and cash equivalents. This ensures that USDL is backed 1:1 with the US dollar, providing stability and security to its holders. The regulatory framework ensures that users can redeem their USDL tokens for fiat currency at any time, maintaining parity with the US dollar.
One of the most significant innovations of USDL is its yield distribution mechanism. Using Ethereum smart contracts, the yield generated from the reserves is distributed programmatically to eligible wallet addresses daily. This rebasing mechanism increases the number of tokens in the holders’ wallets without requiring any additional actions from them. The yield, estimated at around 5% annually, is derived from short-term, high-quality liquid US government securities and cash equivalents.
Paxos International has launched USDL initially in Argentina through partnerships with local crypto platforms such as Ripio, Buenbit, Manteca, and Plus Crypto. These partnerships ensure that millions of Argentinians can access a stable, dollar-denominated asset while earning daily yields. Argentina, with its volatile economic environment, presents a strategic market for Paxos International to offer a reliable and secure financial product that promotes financial inclusion and stability.
Paxos International’s vision for USDL extends beyond Argentina. The company plans to expand its distribution network globally, targeting regions where access to stable financial products is limited. By leveraging blockchain technology, Paxos aims to create a more open and secure financial system. This strategy aligns with the broader trend of using blockchain to enhance financial inclusivity and democratize access to financial products.
