Paxos Standard is a fiat-collateralized stablecoin that offers the advantages of transacting with blockchain-based assets while mitigating price risk. The Paxos Standard tokens (PAX) are issued as ERC-20 tokens on the Ethereum blockchain and are collateralized 1:1 by USD held in Paxos-owned US bank accounts. It is also one of three stablecoins approved by Wall Street regulators, alongside GUSD and BUSD.
Founded in September 2018, Paxos Standard (PAX) is a fiat-collateralized stablecoin backed by USD in accounts held by the company at the U.S. depository institutions.
Paxos Standard was created by Paxos, a New York-regulated financial institution. Led by CEO and Co-Founder Charles Cascarilla, the Paxos team consists of individuals from various backgrounds and experiences ranging from Wall Street to Silicon Valley. There is no fee for PAX conversion or transactions.
Announced publicly on September 10th, 2018, Paxos and Gemini are the first virtual currency companies to be granted Trust charter by the NYDFS (New York State Department of Financial Services). With the charter, Paxos can offer regulated services with crypto-assets and virtual commodities.
Paxos Standard was built to improve the larger financial ecosystem by creating a frictionless global network where digital assets can be mobilized with significantly increased speed, flexibility, and accessibility. It officially began trading on September 27th, 2018. Paxos’ goal is to create a future where digital assets, commodities, and securities can be transferred anywhere at any time.
Paxos Standard is fully collateralized 1:1 with USD in bank accounts, meaning that the total supply of Paxos (PAX) is backed by a fiat held in reserve by Paxos. The requests for purchase and redemption of PAX results in the movement of cash in and out of the reserve, which in turn has the supplyController address mint and burn tokens accordingly. For example, a purchase of $100 will result in the issuance of 100 PAX tokens, and $100 is deposited into the reserve. On the other hand, the redemption of 100 PAX tokens results in the destruction of those 100 tokens and withdrawal of $100 from the reserve to be given to the redeemer. As a resort to a critical security threat, Paxos can pause transfer and approval of PAX tokens via OpenZeppelin’s contracts.
Although the creation and deletion of the tokens occur through Paxos, other transactions in PAX follow ERC-20 smart contracts. This ensures security for PAX, as it gets rid of the need for third parties and instead relies on the long-tested global blockchain network. Additionally, trading tokens is simple with PAX because viewing and transferring of PAX is automatically supported by most Ethereum-supporting exchanges and wallet applications.
Due to the Trust Charter, the New York State Department of Financial Services regulates and monitors the company and its operating procedures to make sure it follows New York banking laws. These banking laws also require PAX to have the power to freeze accounts as well as wipe the balance of said frozen accounts. PAX has a function called “setLawEnforcementRole.” As its name implies, it can give administrative permissions over the circulating PAX supply. Paxos has assured that the function is for preventing illegal activities such as money laundering and terrorist financing and that it will not be used unless required by law.
Paxos Standard smart contract has been audited by Nomic Labs to ensure that the contract works as intended and advertised, and PAX ERC-20 contract code is available for technical reviews on Github. Moreover, Withum, a nationally ranked Top 25 auditing firm, confirms that dollar deposits match PAX tokens in circulation on a monthly basis for greater transparency.
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