Paxos introduces new stablecoin with yield-bearing properties: Lift Dollar

Exciting news from Paxos International! They’ve just rolled out a brand new stablecoin called Lift Dollar (USDL) in Argentina. This innovative token promises a risk-free return to its holders, with plans for further expansion into other countries on the horizon. However, bear in mind that due to legal restrictions, residents from certain countries like the United States won’t be able to take advantage of USDL.

Introducing Lift Dollar (USDL)

USDL operates on the Ethereum blockchain, boasting unrestricted creation and daily payouts to token holders. Each USDL token is fully backed by the U.S dollar at a one-to-one ratio and is supported by assets such as U.S dollar deposits and short-term U.S treasury notes.

Paxos International has made it clear that they are committed to maintaining reserves to cover the total circulation of USDL, ensuring the confidence of their investors.

Say hello to Lift Dollar ($USDL), a stablecoin backed by the U.S dollar that makes accessing US dollars and earning yield on-chain a breeze!

1/8 pic.twitter.com/VYOxN6gruu

— Lift Dollar (@LiftDollar_USDL) June 5, 2024

To ensure transparency and reliability, USDL is regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Monetary (ADGM), setting a high bar for regulatory compliance. This oversight framework is a strategic move to provide a secure environment for USDL holders, independent of Paxos’ financial activities and potential risks.

Generating Yield and Fee Structure

With a return rate of approximately 5%, USDL offers investors a competitive yield closely aligned with the current EFFR. The yield is generated from investments in U.S. Treasury bills and other cash instruments, distributed to investors on a daily rebase basis, adjusting token balances to reflect the earnings.

To manage operations effectively, Paxos International has instituted a distribution fee of 20 basis points and an issuer fee of 30 basis points for USDL. However, for the initial launch period, the issuer fee will be waived to promote adoption among users. This fee structure is designed to provide clarity on the costs associated with holding USDL.

Market Strategy and Accessibility

While Lift Dollar offers numerous advantages, it’s important to note that it’s not available in several countries including the United States, the United Arab Emirates (excluding ADGM), the United Kingdom, the European Union, Canada, Hong Kong, Japan, and Singapore.

These restrictions are primarily due to the potential classification of yield-bearing stablecoins as securities by the U.S Securities and Exchange Commission. Despite these challenges, Paxos remains optimistic about the growth of the stablecoin market, projecting a fivefold increase in the next five years. They believe that USDL will play a crucial role in providing unbanked and underbanked populations with access to U.S dollars, aligning with their mission of financial inclusion.

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