Pax Dollar

Pax Dollar (USDP) is a stablecoin issued by Paxos, a blockchain company. The history of USDP began in 2012 when Paxos Trust Company, LLC, formerly known as iBit, was established by Charles Cascarilla and Rich Teo. The company gained regulatory approval from the New York State Department of Financial Services and entered the U.S. market in May 2015. Initially, the stablecoin was known as the Paxos Standard Token (PAX) but was later renamed to Pax Dollar (USDP).

USDP was launched in September 2018 as an ERC-20 token on the Ethereum network. It is fully collateralized by U.S. dollars held in accounts at insured depository institutions in the United States. The cash reserves include short-term instruments like U.S. Treasury Bills and overnight repurchase agreements, ensuring high liquidity and facilitating conversions to USD when needed.

Paxos has a strong focus on regulation and transparency. The company is registered with the New York State Department of Financial Services, and its bank accounts are audited by Withum, a U.S. auditing firm. This ensures that the number of USDP tokens in circulation is always backed by an equal amount of U.S. dollars, maintaining a 1:1 ratio.

In January 2023, Paxos proposed a partnership with MakerDAO, offering to pay a fee for holding up to $1.5 billion of USDP in their reserves. This proposal aimed to increase the debt ceiling for USDP within Maker's Peg Stability Module reserve system.

Throughout its history, USDP has been designed to provide a reliable and secure payment option, facilitating the adoption of cryptocurrencies while mitigating price volatility. The stablecoin has a circulating supply that varies based on the USD reserves held by Paxos, and it ranks among the top 50 cryptocurrencies by market capitalization.

Pax Dollar (USDP) is a stablecoin that operates on blockchain technology, ensuring a decentralized and distributed ledger system. It is issued by Paxos Trust Company, a regulated financial institution, and is pegged one-to-one with the US Dollar. This means that for every USDP in circulation, there is a corresponding US Dollar held in reserve by Paxos. This parity ensures the stability of the Pax Dollar and shields it from the erratic price movements common in the crypto market.

The issuance and redemption of USDP are straightforward. Users can purchase USDP directly from Paxos in exchange for US Dollars. Similarly, USDP can be redeemed for US Dollars at any time. This ease of conversion between USDP and US Dollars adds to the appeal of this stablecoin.

Paxos holds the US Dollar reserves in accounts at insured depository institutions in the United States. These reserves include cash and cash equivalents such as US Treasury Bills and overnight repurchase agreements, which are highly liquid and readily convertible to USD. The reserves are regularly audited to ensure transparency and trust in the system.

Paxos is a regulated trust company, which provides an additional layer of security for USDP. The company is subject to strict regulatory oversight by the New York State Department of Financial Services, ensuring the highest standards of consumer protection. Furthermore, transactions are quick, efficient, and reliable due to legally approved blockchain technology, extensive monitoring, and surveillance partners.

USDP can be used for various financial transactions, including trading on cryptocurrency exchanges, making purchases, or even as a form of savings. Because it's a digital currency, transactions with USDP can be made from anywhere in the world, at any time, providing the convenience and flexibility not always possible with traditional banking.

Pax Dollar is an ERC-20 token built on the Ethereum network. It has a circulating supply that varies depending on the USD reserves held by Paxos. The token is designed to facilitate international transactions while eliminating the restrictions of the traditional banking system.

Pax Dollar offers several benefits, including regulation, transparency, security, and ease of use. It is a reliable payment option for users who want to take advantage of the blockchain industry without being exposed to market volatility. Additionally, it does not charge any fees for the purchase and redemption of Pax Dollars, making it an attractive choice for users.

Overall, Pax Dollar (USDP) is a stablecoin that provides a reliable and secure way to engage in digital transactions while maintaining a stable value pegged to the US Dollar.

Pax Dollar (USDP) has several strengths that make it a reliable and attractive stablecoin:

1. Regulation: Pax Dollar is fully regulated and backed by the New York State Department of Financial Services, ensuring a high level of trust and security for users.

2. Auditing: The company's bank accounts are regularly audited by Withum, a U.S. auditing firm, to ensure transparency and trust in the system.

3. Instant Purchase and Redemption: The process of purchasing and redeeming Pax Dollars is processed within one business day, providing users with quick and efficient transactions.

4. Security: Paxos has partnered with several transaction monitoring and surveillance teams to secure the funds of investors, making it a secure option for users.

5. No Fees: Unlike some other fiat-collateralized stablecoins, Pax Dollar does not charge any fees for purchasing and redeeming tokens, making it a cost-effective choice.

6. Full Collateralization: For every issued Pax Dollar, there is an equivalent amount in USD held in reserve, ensuring full collateralization and stability.

7. Ease of Use: Pax Dollar can be used for various financial transactions, including trading on cryptocurrency exchanges, making purchases, or even as a form of savings, providing users with flexibility and convenience.

These strengths make Pax Dollar a reliable and attractive option for users seeking a stable and secure digital asset.

Pax Dollar (USDP) carries several risks, primarily related to its management, liquidity, and regulatory environment. Here are some key risks associated with USDP:

1. Risk of Not Recovering Customer Monies: In the event that Paxos Global is unable to convert customer monies into USD Stablecoins, these monies will be deposited into a trust account. If there is a shortfall in the trust account or if the safeguarding institution becomes insolvent, customers may not recover all their monies.

2. Interest Rate and Currency Risks: Although USDP's reserves are held in low-risk assets like cash deposits, money market funds, and U.S. treasury bills, there is still a limited exposure to interest rate risks. This risk is mitigated by the short-dated nature of these instruments.

3. Regulatory Risks: As a digital payment token (DPT) service provider, Paxos Global is subject to regulatory requirements. Failure to comply with these regulations could lead to penalties or restrictions on the service.

4. Risk of Censorship: Regulatory oversight can increase the risk of government censorship, which could impact the stablecoin's network and users.

5. Risk of Insolvency of Safeguarding Institutions: If the safeguarding institution holding customer monies becomes insolvent, Paxos Global will be an unsecured creditor, which could lead to a loss of customer funds.

6. Risk of Shortfall in Trust Account: In the event of a shortfall in the trust account due to obligations or defaults of other customers, there is a risk that a customer may not recover all their monies.

These risks highlight the importance of carefully evaluating the management and regulatory environment of USDP before investing.

• Charles Cascarilla: CEO and Co-Founder of Paxos, established in 2012.
• Rich Teo: Co-Founder of Paxos, a principal analyst.
• Bill Bradley: Member of the Board of Directors, former U.S. Senator and member of the Senate Finance Committee.
• Sheila Bair: Member of the Board of Directors, former Chairman of the Federal Deposit Insurance Corporation (FDIC).
• Walter Hessert: Head of Strategy, involved in the rebranding of Paxos Standard (PAX) to Pax Dollar (USDP).
• J. Christopher Giancarlo: Member of the Board of Directors, former U.S. Commodity Futures Trading Commission chairman.
• Patricia Kemp: Member of the Board of Directors, Co-Founder and Managing Partner of Oak HC/FT.
• Scott Malpass: Member of the Board of Directors, former Chief Investment Officer of the University of Notre Dame.
• Jim Manzi: Member of the Board of Directors, former Chairman of Thermo Fisher Scientific.
• Brian Stern: Member of the Board of Directors, Partner with Declaration Partners LP.