PAXOS (USDP)

PAX DOLLAR

Blockchain technology has introduced exceptional innovations—distributed ledgers, decentralized trust, smart contracts, etc.—yet has not improved on the basic principles that characterize money, nor has it built the trust of the public necessary to achieve popular adoption.

Pax Dollar is designed to leverage the new innovations of blockchain technology to improve the function of money, while being supported by traditional infrastructure that can ensure it is trustworthy. In other words, as a regulated trust company and financial institution issuing a token backed by US dollar deposits, Paxos can offer a token that combines the trust and stability of fiat currency with the utility and immediacy of digital assets.

Basics

Pax Dollar, or USDP, is a token that is backed one-for-one by cash and cash equivalents and available through Paxos. USDP is available one-to-one in exchange for USD and redeemable one-to-one for USD. Upon redemption, USDP tokens are immediately removed from the supply; USDP are only in existence when the corresponding dollars are in custody.

As a trust company organized under New York State banking law and regulated by the New York State Department of Financial Services, Paxos operates under governing principles of the highest standard. Unlike a bank, which uses client funds for its own benefit and funding, a trust company acts as a fiduciary that custodies customer deposits and therefore will always keep customer funds completely segregated. All dollar deposits are held in FDIC-insured US banks or backed by US government treasuries and customer dollars are all accounted for as customer property. A full overview of Paxos reserve practices can be found in the Paxos Terms and Conditions.

In other words, Paxos accepts dollar deposits and issues Pax Dollar tokens which can be traded, transacted and transferred easily and without friction. Currently, the economy of digital assets is fluid, global and fast, yet faces meaningful roadblocks when trading between digital assets and fiat because of the inherent delays in the traditional banking system. Pax Dollar gives users the convenience of keeping their liquidity in digital assets while still maintaining stability.

Pax Dollar is as good as or better than fiat in each of its functions: it is easier to exchange, maintains the same unit of account, and provides the same store of value. Backed one-for-one by cash and cash equivalents and supported by a regulated financial institution, Pax Dollar is therefore an improved model for money.

Key Product Features and Benefits

• Pax Dollar tokens are issued and redeemed by Paxos. As a trust, Paxos issues USDP directly with no need for any middlemen. This enables more efficient operations, including shorter redemption windows (USDP can be redeemed for dollars within one business day) and lower fees.

• USDP can be sent to or received by anyone with an Ethereum wallet. All transactions operate according to the rules of a smart contract on the Ethereum platform following the ERC-20 protocol. Because of this smart contract, transactions eliminate human error and the system operates only as programmed.

• USDP is available to be listed on exchanges around the world. Since it is backed by the dollar, it can be used as a proxy for understanding the value of the dollar as compared to other digital assets.

• The Paxos exchange, itBit, will allow users to cash out of their holdings directly and instantaneously to USDP rather than cash if they choose. itBit will also trade USDP OTC.

• USDP is available 24/7 to facilitate settlement against any type of asset including crypto, security and asset tokens or for payments. Unlike fiat, which is only available to settle trades during bank business hours, USDP can move anywhere, anytime.

• Built on the Ethereum blockchain, USDP is a programmable token that can participate in the larger global community of tokens, helping create a global platform for programmable money with stability.

Technology

Pax Dollar tokens are purposely designed with simplicity in mind. In exchange for $1 USD, 1 USDP is issued. Similarly, on the redemption side, 1 USDP can be redeemed for $1 USD. The exchange will always be one-to-one. Because of this simplicity, the whole system can be written as a basic smart contract, ensuring that it operates under these rules in a programmed way. (The token today lives on the Ethereum blockchain, but we can see potential value in a blockchain-agnostic future.)

As a smart contract on the Ethereum blockchain, Pax Dollar follows the ERC-20 protocol. Ethereum is a decentralized blockchain-based ledger that supports smart contracts; with over 100,000 smart contracts, Ethereum is the most widely-used digital asset platform. A smart contract is a combination of data (e.g., a table of account balances) and programmed procedures for working with that data (e.g., a programmed procedure for transferring balances between accounts). Both the integrity of the data and the fidelity of procedure executions are ensured by the distributed consensus protocol of the underlying Polygon blockchain.

Because Pax Dollar follows the standard ERC-20 protocol, most MATIC-supporting exchanges and wallet applications already have built-in support for viewing and transferring USDP. While the initial issuance of a token and redemption of tokens for USDP occur through Paxos, any other transactions in USDP follow the smart contract written to the ERC-20 specification, relying on the providence of the network rather than any middleman.

Polygon Contract Address: 0x6F3B3286fd86d8b47EC737CEB3D0D354cc657B3e