Hassan Maishera
TL;DR
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Paxos International has announced the launch of a yield-bearing stablecoin called Lift dollar (USDL).
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The product is initially focusing on the Argentinian market but will not be available in the United States.
Paxos International Launches USDL
Paxos International, a UAE-based entity of Paxos, has announced the launch of a yield-bearing stablecoin called Lift dollar (USDL). According to the company, Argentina is the first market for this product.
Paxos International stated that,
"USDL is issued permissionlessly on Ethereum and pays yield programmatically on a daily basis to token holders, subject to the reserve assets fully backing the total value of USDL in circulation."
The product is one-to-one backed with the U.S. dollar. USDL also holds liquid assets like U.S. dollar deposits, short-duration U.S. treasuries, and cash equivalents, and it is also regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM).
Charles "Chad" Cascarilla, a member of the board of directors of Paxos International and co-founder and CEO of Paxos told The Block that USDL allows users to earn risk-free returns on their investments.
Cascarilla added that Paxos International doesn’t do anything except issue the stablecoin. "if anything happened to Paxos, the assets are not part of some bankruptcy process. They are immediately returned to investors," Cascarilla said.
USDL Launches in Argentina, Not Available in the United States
Paxos International revealed that it is first launching the USDL stablecoin in Argentina via crypto platforms Ripio, Buenbit, and TiendaCrypto as its distribution partners.
Ronak Daya, head of product at Paxos, explained that users can earn around 5% yield on USDL, close to the current effective federal funds rate or EFFR. Daya further revealed that the company utilizes the rebasing technique to distribute yield, with users' USDL holdings increasing daily with the yield.
Daya said,
"We believe that the stablecoin market will 20x from now over the next five years, and we believe that we'll be able to capture a large portion of the future growth and take market share from existing incumbents."
The company will charge a 20 basis points distribution fee and a 30 basis points issuer fee and pay out the remaining yield earned to users. However, Daya said Paxos International will waive its issuer fee during the initial promotion period of USDL.
Cascarilla revealed that USDL isn't available to residents of the United States. The product is also yet to launch in other jurisdictions, including the UAE except ADGM, the U.K., the European Union, Canada, Hong Kong, Japan, and Singapore.
USDL didn’t launch in the United States as the Securities and Exchange Commission could deem it as a security. It is also the reason why Paxos, the parent company of Paxos International, doesn't offer yield on its existing stablecoin products such as Pax dollar or USDP.
Cascarilla commented that,
"Stablecoins inherently are about helping those people who are unbanked or underbanked, who don't have access to dollars, for a number of different reasons."
