In a groundbreaking move, Paxos International, the global arm of the well-known blockchain infrastructure firm Paxos, has announced the launch of a US dollar-pegged, interest-bearing stablecoin named Lift Dollar (USDL). This pioneering digital asset aims to redefine the stablecoin landscape by offering yield on reserves, promising a novel approach to stablecoin utility and investment.
The Advent of an Interest-Bearing Stablecoin
USDL is set to be a game-changer in the world of digital currencies. Regulated by the Abu Dhabi Global Market (ADGM), USDL will offer a daily yield based on the interest earned from its reserves, consisting of liquid US Government Securities and cash equivalent assets. Unlike traditional stablecoins where users earn interest through activities like yield farming and staking, USDL will automatically distribute yield via Ethereum smart contracts using a process called rebasing. This ensures that the stablecoin is backed 1:1 in value by its reserves, providing a secure and profitable holding for investors.
Key Features of USDL:
Regulated and Secure: USDL will adhere to the stringent regulatory requirements of ADGM’s Financial Services Regulatory Authority, ensuring transparency and security for its holders.
Automated Yield Distribution: Through Ethereum smart contracts, USDL will pay yield programmatically daily, leveraging the returns from high-quality, liquid reserve assets.
Broad Availability: Initially, USDL will be available in Argentina via platforms like Ripio, Buenbit, Manteca, plus Crypto, offering a new investment avenue in the region.
Limited Accessibility
Despite its promising features, USDL will not be available to residents in several major markets including the United States, the United Kingdom, Canada, the European Union, Hong Kong, Japan, Singapore, and areas of the UAE outside ADGM. This restriction aligns with the regulatory framework and securities laws in these
jurisdictions.
Paxos' Strategic Position
Paxos International is no stranger to the stablecoin market, already minting assets like PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) under the regulation of the New York Department of Financial Services (NYDFS). However, the company ceased minting Binance USD (BUSD) following regulatory challenges from the NYDFS and the US Securities and Exchange Commission.
ADGM's Rapid Growth in Crypto
The Abu Dhabi Global Market has quickly become a hub for crypto innovation since its inception in 2013. The ADGM's comprehensive guidelines for distributed ledger technology (DLT) have attracted numerous blockchain firms such as Chainalysis, Blockdaemon, Rain, M2, Binance FZE, Laser Digital, and QCE Capital. Its partnership with Solana to develop DLT technology further cements its role as a pivotal player in the crypto sector.
The introduction of USDL by Paxos International marks a significant milestone in the evolution of stablecoins. By combining regulatory compliance with innovative yield distribution, USDL offers a compelling new option for investors seeking stability and growth in their digital assets portfolio. As the ADGM continues to foster a conducive environment for blockchain development, Paxos' latest offering could well set the stage for the next wave of financial innovation.
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Source: Coindaily
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