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- Paxos International launches USDL, a yield-bearing stablecoin, initially in Argentina.
- Users can earn about 5% yield on USDL, backed by high-quality liquid assets.
- USDL targets unbanked populations, aiming to capture market share in the growing stablecoin sector.
Paxos International, a UAE-based entity, has introduced Lift Dollar (USDL), a yield-bearing stablecoin, with Argentina as its initial market. This innovative stablecoin, issued on Ethereum, offers a daily yield to token holders, backed one-to-one with U.S. dollars.
Paxos International ensures that USDL is supported by high-quality liquid assets such as U.S. dollar deposits, short-duration U.S. treasuries, and cash equivalents. The Financial Services Regulatory Authority of Abu Dhabi Global Market regulates this stablecoin, emphasizing its secure and reliable nature.
Today, Paxos International announced the launch of Lift Dollar ($USDL) – a yield-bearing stablecoin that democratizes access to US dollars and safe yield generated from cash and cash equivalent assets. Now, you can seamlessly spend, save and trade, all while earning yield.
— Paxos (@Paxos) June 5, 2024
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Yield and Security Measures
USDL promises a near risk-free return, according to Charles “Chad” Cascarilla, CEO of Paxos. The stablecoin’s structure ensures that even if Paxos faces financial issues, the assets remain protected and are immediately returned to investors. This security measure distinguishes USDL from other stablecoins in the market.
Users can currently earn about 5% yield on USDL, a figure comparable to the current effective federal funds rate. Paxos employs a rebasing technique to distribute the yield, leading to an increase in users’ USDL holdings daily. The company charges a 20 basis points distribution fee and a 30 basis points issuer fee, though the issuer fee is waived during the initial promotion period.
Market Strategy and Global Reach
Paxos International is rolling out USDL in Argentina through crypto platforms like Ripio, Buenbit, and TiendaCrypto. This strategic launch aims to cater to the unbanked and underbanked populations who lack access to stable financial systems. USDL is not available to residents of the U.S., the UAE (except ADGM), the U.K., the European Union, Canada, Hong Kong, Japan, and Singapore, primarily due to regulatory constraints.
Ronak Daya, head of product at Paxos, believes the stablecoin market will grow significantly in the next five years. He anticipates that USDL will capture a substantial market share from existing players. Paxos International’s targeted approach aims to bring financial stability to underserved markets, reinforcing its commitment to financial inclusion.
Paxos International’s launch of the USDL stablecoin marks a significant step in financial innovation. By providing a secure, yield-bearing stablecoin, Paxos aims to address the needs of underbanked populations globally. As the stablecoin market evolves, USDL is poised to become a key player, offering a reliable and attractive financial product to its users.