Paxos Standard is a fully USD-collateralized stablecoin released by the Paxos Trust Company. Right off the bat, probably the most interesting aspect of this stablecoin is the fact that it is regulated and approved by the New York State Department of Financial Services.
The said standard entered public attention when it was released, at the same time as another stablecoin, the Gemini Dollar (GUSD). If this name sounds familiar, then it’s because the Gemini Dollar is the native token for the Gemini cryptocurrency exchange, owned and funded by the infamous Winklevoss twins.
Paxos – the basics
The first thing you should know is the fact that Paxos is a “fork” of an exchange platform called itBit and it marks the move to a company that is focusing on creating a modern settlement platform.
The Paxos Standard is, in fact, an ERC-20 token built on top of the Ethereum blockchain. This means that it is fully compatible with all wallets that support Ethereum. The tokens remain in circulation only as long as there are corresponding US dollars in the reserves. Hence, when PAXs are redeemed for USD, the tokens are immediately burned and destroyed.
Another important aspect of the Paxos Standard token is the fact that its smart contract is audited by Nomic Labs, a very powerful smart contract auditor. Currently, the PAX token is ranked 36th on CoinMarketCap, with a total market cap of $157,392,693 and a circulating supply of 155,629,262 PAX out of 155,661,209 PAX. Users can purchase and redeem PAX tokens directly at Paxos.com on a 1:1 basis with the US Dollar.
The Paxos team
The Paxos Trust Company was registered in 2012 and has managed the crypto exchange itBit for a long time. In 2018, the company decided to transform the exchange into a platform for settlements and also offered a stable coin.
This inspired decision was taken by the Paxos team which is led by the CEO and co-founder Charles Cascarilla. The CEO has well over 15 years of experience in financial services and has co-founded Cedar Hill asset management in 2005, after working at prestigious banking institutions such as Bank of America and Goldman Sachs.
Andrew Chang is another big name of the team as COO of Paxos. Andrew has over a decade of experience in the fintech industry and has previously worked at Google in the businesses development department. The full list of employees and team members can be found on the dedicated section on the project’s main website.
Paxos use cases
In order to understand the potential use cases of Paxos, one must first look at how the platform works and what is the main idea behind it. For starters, it’s worth noting that the main goal of the platform is the solving of the long-standing problem of settlement risk. The idea to build the platform without its bespoke blockchain (and instead of using Ethereum) is an intentional one, and the company has no plans to transition to its own mainnet.
The platform was built with having a regulated trust in mind. This makes it very easy to legally transfer assets and money. By combining this type of permission with the blockchain technology, Paxos ensures fast, secure, and reliable transactions.
Couple this the project’s whitepaper, and it’s evident that this project is all about improving the speed of transfer of currencies, the way physical assets are exchanged into digital ones, reducing or eliminating the operating costs in trade operations, and minimizing the commission and fees in connection with the transfer of funds.
The role of the PAX token
In principle, the PAX token is not very different from other crypto tokens. While it’s very similar to other stablecoins such as Tether, TrueUSD, and Gemini Dollar. One of the main differences is the fact that the PAX token is mostly intended for use on the Paxos platforms (it was never intended to be a tradeable asset, even though it is supported by lots of crypto exchanges).
At least theoretically, 1 PAX is equal to 1 USD, but it’s still able to fully determine how well it holds its value. The PAX allows users to convert digital assets to fiat currencies with no associated fees. Furthermore, assets can be rapidly converted from physical to digital and vice versa.
Even though the Paxos Trust is a somewhat old project, its new blockchain-based platform is still a very new product. Hence, it has a lot to prove over the following year. The project’s token could potentially surpass other stablecoins such as Tether, even though the project itself is not exactly innovative. Still, the fact that it is fully backed by the USD and other traditional financial institutions should be enough to ensure its success.