Paxos launches Lift Dollar, a rebased yield-generating stablecoin

Paxos, has introduced a new stablecoin called Lift Dollar (USDL) through its UAE-based entity, Paxos International. USDL is designed to generate yield for its holders, offering a programmatic daily rate of around 5%, which is aligned with returns on US Treasury bonds.

The stablecoin is regulated by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) and is structured similarly to other stablecoins issued by Paxos, such as PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG).

These stablecoins are matched 1:1 with US dollars, backed by short-term US government securities, and overseen by a prudential regulator, with assets positioned remotely from potential bankruptcy situations.

Paxos explains that the product “leverages a technical mechanism called rebasing to seamlessly distribute yield to users’ wallets.”

Paxos CEO Charles Cascarilla claims that USDL goes beyond democratizing access to dollars by also democratizing the risk-free rate in the safest manner possible. The stablecoin is particularly focused on Argentina at launch, where it will be available to consumers through distribution partners Ripio, Buenbit, and TiendaCrypto.

“Using an Ethereum smart contract, USDL distributes the yield generated from its reserves to eligible wallet addresses daily without requiring any additional steps by the token holder,” the company said in a press release.

However, USDL will not be available in the US due to a lack of regulatory guidance, as a yield-bearing stablecoin could be seen as a security by the US Securities and Exchange Commission.

Notably, the stablecoin is also unavailable to residents of certain other jurisdictions, including the UAE (except ADGM), the UK, the European Union, Canada, Hong Kong, Japan, and Singapore.

Paxos International aims to target audiences globally who are unbanked or underbanked and lack access to dollars. The company believes that the stablecoin market will grow significantly over the next five years and aims to capture a large portion of this growth while gaining market share from existing competitors.