Paxos launches Lift Dollar (USDL), a unique overnight yield generating stablecoin

Paxos launches Lift Dollar (USDL), a unique overnight yield generating stablecoin

By Charles Thuo - min read
Paxos launches Lift Dollar (USDL), a unique overnight yield generating stablecoin
  • The new Lift Dollar (USDL) stablecoin launched by Paxos offers daily yield from US government securities.
  • The USDL stablecoin is issued on Ethereum.
  • Currently the new stablecoin is accessible in the UAE, Europe, UK, and Japan.

Paxos International has introduced a revolutionary stablecoin, Lift Dollar (USDL), issued and regulated under the Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority (FSRA).

At its core, the USDL stablecoin offers unique overnight yield from US government securities, representing a significant innovation and democratizing access to interest earned from stablecoin reserves.

The unique features of the Lift Dollar (USDL)

Lift Dollar (USDL) is distinguished by its yield-generating capabilities, offering overnight yield from short-term, high-quality liquid US government securities and cash-equivalent reserve assets.

Unlike traditional stablecoins, USDL pays daily yield to token holders, reflecting the total value of the circulating USDL, which is fully backed by reserve assets.

This approach shifts the interest earned from stablecoin reserve assets directly from the central issuer to the appropriate end holders, democratizing access to financial gains typically reserved for institutional investors.

Furthermore, Paxos International will ensure USDL’s issuance is permissionless on the Ethereum blockchain, promoting transparency and accessibility. This permissionless issuance model allows for greater trust and ease of access for users.

Additionally, the design of USDL includes programmatic daily returns, likened to a savings product, offering users a consistent and predictable yield, distinguishing it from other stablecoins that function more like checking accounts.

Paxos’ regulatory compliance and strategic availability

Paxos has launched USDL through its UAE branch, Paxos International, adhering to stringent regulatory standards set by the ADGM’s FSRA. This compliance underscores Paxos’ commitment to regulatory adherence and financial security, positioning USDL as a reliable and secure investment option.

In addition, the assets backing USDL are kept safe from potential bankruptcy situations, ensuring that the value of the stablecoin remains robust and protected.

However, due to a lack of regulatory guidance in the US, USDL will not be available to American users. Instead, Paxos has strategically targeted regions including Europe, the United Kingdom, and Japan, where regulatory environments are more favorable.

This strategic move allows Paxos to tap into markets with significant demand for stable, yield-generating investment options, expanding its global footprint.

Paxos CEO Charles Cascarilla has emphasized that USDL is structured similarly to other stablecoins issued by Paxos, such as PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG). All these stablecoins are matched 1:1 to the dollar and backed by short-term US government securities, ensuring stability and trust.

With planned collaborations with exchanges and wallet service providers, Paxos aims to enhance the usage and accessibility of USDL, making it a significant player in the stablecoin market.