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- Issued by Paxos in Singapore, Global Dollar USDG aligns with upcoming MAS regulatory standards and sets itself apart from other stablecoins.
- Under USDG’s model, network participants are rewarded based on contributions to network connectivity and liquidity.
A group of prominent firms in the crypto industry has unveiled a new stablecoin called the Global Dollar (USDG). They have designed this stablecoin to channel yield from reserve assets back to participating entities that facilitate its adoption.
New Global Dollar USDG Stablecoin Enters The Market
For context, the Global Dollar Network, as the system is called, counts a strong lineup of industry players among its initial backers. This includes Anchorage Digital, Bullish, Galaxy Digital, Robinhood, Kraken, Nuvei, and Paxos.
Paxos, which issues the USDG from Singapore, indicated that the stablecoin is tailor-made to align closely with regulatory standards. According to Paxos, USDG is “substantively compliant” with the upcoming stablecoin regulatory framework set by the Monetary Authority of Singapore (MAS), per the CNF report.
Charles Cascarilla, CEO of Paxos, explained that USDG represents a different approach to stablecoins by prioritizing rewards for participant entities instead of individual users. “This is meant to really be a community token,” Cascarilla stated. He added, “Anybody can join the Global Dollar Network and accrue rewards for activity. We’re distributing something like 97% of the economics.”
Stablecoins are a major sector in digital finance, with market dominance held by Tether and Circle, which issue the largest two stablecoins, USDT and USDC, respectively. However, USDG aims to distinguish itself from these leading stablecoins by offering yield-sharing incentives. This development comes at a time when stablecoins are preparing for a major shift from trading to value storage, reported CNF.
Moreover, Cascarilla pointed out that while both Tether and Circle typically retain all yield from reserves, USDG’s structure requires it to distribute income generated from reserves. This reserve will largely consist of U.S. Treasury securities.
Reward To Participants
Further, this model rewards participants based on their roles in driving connectivity and liquidity within the network. Thus, Cascarilla described this system as essential for building a “thriving ecosystem.”
Under USDG’s framework, various activities can contribute to reward eligibility. “The way we have set this up is that the participants are being rewarded for activity that helps grow the utility of the network,” Cascarilla noted. He also emphasized that since different firms contribute to network growth in diverse ways, rewards will vary based on the specific contributions of each partner.
While the USDG stablecoin targets businesses rather than individual users, it will still be accessible across the U.S. via the distribution network of participating companies. The distribution network definitely includes Anchorage Digital, which operates across all 50 states. Cascarilla elaborated that this participant-centered model reflects the goal of incentivizing network expansion by rewarding firms for supporting the stablecoin.
To facilitate reserve management and ensure better cash handling for USDG, DBS Bank, the largest bank in Southeast Asia by assets, has been appointed as the primary banking partner. DBS will oversee cash management and custody services to further boost the network’s reliability.