Pax Dollar is a USD-backed stablecoin designed to facilitate international transactions while eliminating the restrictions of the traditional banking system.
A vast majority of global financial institutes are eagerly willing to use blockchain systems for global transactions because the users need to go through a complicated process while sending money internationally. Furthermore, their transaction history is easily accessible by the financial institutions and local government.
But price volatility is a major concern for most of them. In this situation, stablecoins enable them to take advantage of the blockchain industry without being worried about their assets.
What are stablecoins?
The stablecoins are the crypto tokens that are backed by fiat currencies, commodities, and other traditional assets. Some stablecoins are even backed by other cryptocurrencies.
The main goal of these coins is to maintain a consistent value over time so that the users can trade globally or store these tokens in their wallets as digital assets.
Fiat-collateralized Stablecoins – These stablecoins are pegged to a fiat currency and their value is determined accordingly. Most of these coins are centralized because an organization issues crypto tokens to the users depending on the amount submitted in the reserve.
Tether, USD Coin, TrueUSD, Paxos Standard Token, Gemini Dollar, and Digix Gold are some popular examples of fiat-collateralized stablecoins.
Crypto-collateralized Stablecoins – These stablecoins are pegged to another cryptocurrency. The value of the stablecoin is maintained with the crypto tokens held in the reserves. Makercoin and Havven are the top examples of Crypto-collateralized stablecoins.
Algorithmic Non-collateralized Stablecoins – These stablecoins aren’t backed by any collateralized assets but their value is maintained through different algorithms. Basis, Fragments, and Kowala are the leading examples of algorithmic non-collateralized stablecoins.
Hybrid Stablecoins – These stablecoins are designed with a mixture of patterns discussed above. TerraUSD was a significant example of a hybrid stablecoin as it had several features of an algorithmic stablecoin and the organization had also stored a huge amount of BTC tokens to use as collateral.
However, this stablecoin crashed recently due to certain factors. Carbon is another example of a hybrid stablecoin.
What is Pax Dollar (USDP)?
Pax Dollar is a fiat-collateralized stablecoin that is pegged to the U.S Dollar. The unique thing about Pax Dollar is that it’s managed by a company that has a charter from the New York State Department of Financial Services. Thus, it has the legal authority to provide its services within the crypto world.
Unlike Tether and USDC, the users can trust this project as they can verify the total holdings of this organization through authentic sources. Paxos company has created a number of accounts in the U.S depository institutions where an equal amount of US Dollars are held depending on the Pax Dollar issued by the company.
What Makes Pax Dollar Unique?
Pax Dollar offers a number of benefits that make it a better choice than other fiat-collateralized stablecoins.
Regulation – Paxos company is registered with the New York State Department of Financial Services. Thus, it can’t issue extra Pax Dollars.
Audited – Withum, A U.S auditing firm, audits all the bank accounts of Paxos company.
Instant Purchase and Redemption – The process of purchasing and redeeming the Pax Dollars is processed within one business day.
Security – Paxos has partnered with several transaction monitoring and surveillance teams to secure the funds of investors.
No Fees – Some fiat-collateralized stablecoins like TrueUSD charge 01% of the total transaction amount at the time of purchasing and redeeming the TUSD tokens. Furthermore, they have a minimum withdrawal limit of $10,000. But Pax Dollar doesn’t have any such restrictions. The users can buy/redeem Pax Dollars without paying extra charges.
Pax Dollar Brief History
Pax Dollar is an ERC-20 token launched by Paxos Standard in September 2018. Charles Cascarilla and Rich Teo, the co-founders of Paxos Standard, introduced the Pax Dollar. The company employed former Silicone Valley and Wall Street Employees to introduce a payment system that complies with the traditional payment options.
Paxos is one of the first crypto companies registered with the New York State Department of Financial Services. Paxos is currently focused on establishing the reputation of its stablecoin. However, the company has the goal of creating an ecosystem where users can transfer digital assets, securities, and commodities globally without any restrictions.
How Does Pax Dollar Work?
Pax Dollar is dedicated to becoming a reliable payment option for users who want o take advantage of the blockchain industry. Paxos Standard holds several accounts with the U.S Depository Institutions. The users need to send U.S Dollars to one of these accounts to receive the Pax Dollars.
Paxos Standard mints an equal amount of Pax Dollars through a smart contract and the tokens are transferred to the user. The users can get information about the company’s account from its official website. When a user submits a redemption request, the Pax dollars are burnt and the amount is released to the user.
It’s worth noting that Paxos has a minimum conversion limit of $100. The interesting part is that Paxos doesn’t charge any fee for the purchase and redemption of Pax Dollars.
Pax Dollar Tokenomics
Pax Dollar is an ERC-20 token built on the Ethereum network. With a circulating supply of 945.6 million tokens, Pax Dollar has a market cap of $946 million. It ranks among the 50 best cryptocurrencies in terms of market cap. The circulating supply varies depending on the USD reserves the company has in its accounts.
Conclusion
Pax Dollar is a USD-backed stablecoin launched by Paxos Standard. It facilitates the mass adoption of cryptocurrencies while absorbing the price volatility of the crypto market. The best part is that Paxos Standard is registered with the New York State Department of Financial Services. Thus, investors feel secure about their investments.
If you need more information about how Pax Dollar works, feel free to get in touch with us.
