The recent collapse of USDT from Tether forced the entire crypto community to frantically search for analogues to the largest stablecoin in order to preserve their savings. For Tether’s competitors, this moment was truly a breakthrough: the influx of money was so strong that stablecoin prices soared by more than 10%, and trading volumes increased tenfold.
But the most important outcome of the Tether collapse is the rapid increase in awareness among the crypto community that there are many other stablecoins on the market that are superior to USDT in most respects. Despite the fact that Tether has almost recovered to normal values, users are in no hurry to switch to it again from other stable coins. This is evidenced by a comparison of trading volumes before and after the USDT decline.
The golden times for stablecoins are just beginning, so it is necessary for the entire cryptocurrency community to have comprehensive information about the developing part of the market. We have already analyzed in detail such stablecoins as GUSD from Gemini, USDC from Circle and TUSD from TrueUSD. It's time to look at another interesting project - Paxos Standard Token (PAX).
History of PAX
In 2012, a trust fund on the blockchain was registered in the United States - Paxos Trust Company, which received a license from the US Securities and Exchange Commission (SEC). Later, this fund created a blockchain platform for reliable and fast cash payments. This platform combines the legal ability to move funds and assets with distributed ledger technology to enable payments quickly and securely. The combination of a regulated trust and blockchain creates a reliable and convenient payment platform that eliminates any risks when making money transfers.
In 2020, the company decided to delve deeper into blockchain technology and released its own stable token based on the Paxos platform - PAX.
Features of the Paxos platform
The Paxos platform is designed for making payments and can be easily integrated into any system. The official website of the project contains a diagram reflecting the principle of operation.
- Regulated Trust : Paxos's legal trust status allows the transfer of funds and assets under the protection of US law.
- Blockchain technology : The use of distributed ledger technology allows for the simultaneous and rapid exchange of assets and money.
The company also cites three key advantages that differentiate their platform from competitors:
- Paxos can execute transactions instantly, using fewer intermediaries, which minimizes risks;
- Using blockchain allows you to reduce operating costs for system management, which are typical for legacy systems;
- In addition to this, the platform offers low commissions, allowing you to save on each transaction and thereby increase your profits.
Paxos project team
Before the platform was introduced to the cryptocurrency world, the Paxos Trust Company was born in 2012. The project itself was created quite recently, in 2020. And the trust company operates under the supervision of the US Securities and Exchange Commission (SEC). Project team:
- Charles Cascarilla is the CEO and co-founder. 15 years of experience in the financial sector. Was involved in the integration of blockchain technology into traditional payment systems. He is a co-founder of Institutional Asset Management Complex Cedar Hill Capital Partners since 2020 and its venture capital subsidiary Liberty City Ventures with a member of the Board of Governors of the Hyperledger project. He was a manager at Claiborne Capital and worked at Bank of America Securities and Goldman Sachs. Board member of several philanthropic and private companies, including Project ALS and the Centurion Foundation. He holds a bachelor's degree in finance from the University of Notre Dame and is a CFA charterholder.
- Andrew Chang is the Chief Operating Officer of Paxos. He has more than ten years of experience working in technology companies and startups, and is a partner in Liberty City Ventures. Worked as a lead strategic manager for partner development at Google, developing the display advertising products business. Previously, he was the Chief Operator for ConditionOne and an Associate Member of TechStars New York.
- (Rachel Nelson) Rachel Nelson is a lawyer. More than 16 years of experience advising clients in the financial services industry. She was assistant general counsel at JPMorgan, advising on issues related to financial technology, new product development (such as biometric authentication for mobile banking), industry initiatives to address the challenges of non-bank FinTech platforms, and applicable laws and regulations related to money laundering, data privacy and fraud. .
- Rajesh Nair - Vice President of Engineering. He has more than 15 years of experience in both financial and silicon technologies. Prior to joining Paxos, he was the Chief Architect for the trading system and enterprise data hub at BlackRock. Has extensive experience in large-scale platform development and distributed systems.
- Bharath Jayaraman - Vice President of Public Relations. Has over 15 years of experience collaborating with leaders and employees at tech firms on communications, talent and culture. His experience at Google, Amazon, Facebook spans the US, Asia and Europe. He holds a Master's degree in Business and Industrial Labor Relations from Cornell University. Marisa Goldberg.
There are 8 people in the team in total. Each of them has active profiles on LinkedIn, Instagram, Facebook. The team prefers to remain silent about their future plans; in any case, nothing is said about them on the project’s official website, and there is no Road Map. The technical details can be found on github.
Characteristics of the PAX token
Paxos Trust positions its token as a tool for simple, fast and reliable movement of money.
PAX is built on the ERC-20 Ethereum platform, allowing it to be stored on a variety of popular third-party wallets and making it easy to add to exchanges.
A total of 63.4 million tokens have been issued so far, of which 41.5 million are available for trading. The PAX rate is always $1 as it is backed by US dollars.
Peculiarities
Because it is fully backed by dollars, Paxos Standard offers a flexible, digital alternative to cash that is available 24/7 for instant transaction settlement and is fully redeemable.
As a trust company, Paxos is a fiduciary and qualified custodian of client funds and can therefore offer greater protection for client assets than any other existing stable product.
Dollar deposits were used to purchase PAX from Paxos. com are always held in separate accounts at multiple FDIC-insured banks. Verified Paxos customers can purchase and redeem tokens directly through Paxos.com on a 1:1 basis using USD.
Paxos Standard was designed as an Ethereum token written in accordance with the ERC-20 protocol, so that anyone with an Ethereum wallet will be able to send and receive Paxos Standard tokens.
The smart contract has been verified by smart contract experts Nomic Labs and ChainSecurity, and national audit firm Exum, which will be in place at the end of the month, will conduct attestation procedures on token and bank accounts.
“We conducted two security audits of the Paxos Stablecoin system, Paxos Standard (PAX), and no vulnerabilities were found,” auditors at Nomic Labs believe.
Answering the question why we need another stablecoin, the Paxos team highlights the following features of its crypt:
- no commission when converting to fiat;
- not subject to volatility;
- the ability to quickly convert assets 24/7;
- Each token is backed by US dollars, which are held in US bank accounts insured by the Federal Deposit Insurance Corporation (FDIC).
PAX Benefits
The developers highlight six key advantages of their stablecoin compared to competitors:
- Reliability : Paxos Trust operates under the supervision of the New York State Department of Financial Services, making Paxos Standard the first stablecoin issued by a financial institution.
- Stability : the PAX rate will always be equal to $1, which is guaranteed by the fiat reserve.
- No fees : Not only are there no fees when making PAX transactions, but also when converting tokens into dollars and vice versa.
- Speed : Thanks to the use of the Ethereum network, PAX is an analogue of the dollar, not tied to banking hours and can be used 24/7. Moreover, transactions on the network are guaranteed to go through quickly, but in the case of banks this can take several days.
- Audits : The entire volume of PAX tokens released to the market is covered in US dollars, which are held in banks with insurance from the Federal Deposit Insurance Corporation. The auditing company Withum checks monthly the availability of dollar reserves in these banks.
- Support : a controversial advantage, since here the company promises to provide a personal manager who provides support 24/7. But this is only available to clients who purchase at least $100 thousand in tokens.
Crypto exchanges Gemini and Paxos received New York State approval for stablecoins
As Bitcoinmagazine writes, two cryptocurrency exchanges Gemini and Paxos have received approval from the American regulator of the State of New York to issue their own digital currencies, included in the “stablecoin” category and strictly pegged to the US dollar in a 1:1 ratio.
Thus, it became known that the New York Department of Financial Services (NYDFS) has approved the launch of the Gemini Dollar (GUSD) virtual token by Gemini Trust, whose owners are the famous Winklevoss twin brothers.
In turn, permission from the department was also received by an organization such as Paxos Trust, which approved the issue of the new cryptocurrency Paxos Standard (PAX). Both coins appeared in the cryptocurrency world yesterday, September 10, 2020.
Currently, the leading position in capitalization and popularity among stablecoins is occupied by a digital currency such as Tether (USDT), which was launched back in 2014. It is worth noting that cryptocurrencies pegged to the US dollar are a good alternative to cash these days and also serve as a hedge against volatility.
However, there is currently an opinion in the cryptocurrency community that the blockchain startup Tether is “not clean” and is manipulating the value of Bitcoin. That is why, according to a press release from the NYDFS, GUSD and PAX digital tokens are subject to the Bank Secrecy Act and the Anti-Money Laundering Act, and are also regulated by the Office of Foreign Assets Control. Thus, Gemini and Paxos stablecoins cannot be used for money laundering and terrorist financing.
“Thus, we see that companies are able to issue their own cryptocurrencies that comply with high government standards and regulatory frameworks, which in turn provides the necessary regulation of tokens and consumer protection,” said NYDFS head Maria Vullo.
Unlike Tether (USDT), which was issued on the Bitcoin blockchain using the Omni Layer protocol, the new cryptocurrencies Gemini Dollar (GUSD) and Paxos Standard (PAX) are ERC-20 virtual coins that operate on the Ethereum blockchain.
According to Gemini's blog post, all users of their cryptocurrency exchange will be able to freely exchange their US dollars for GUSD digital tokens at a 1:1 ratio, as well as withdraw them from the trading platform to their Ethereum wallet address. In turn, the Gemini crypto exchange will allow you to make a reverse exchange of Gemini Dollar virtual coins to American fiat currency.
However, the Winklevoss twins claim that all US dollars needed to back the digital currency GUSD will be held in a state bank and also federally insured. Meanwhile, it is reported that independent audit company BPM Accounting and Consulting will conduct a monthly audit of Gemini Trust's bank funds.
It is also worth noting that the smart contracts of the new stablecoin Gemini Dollar (GUSD) have been successfully verified by an organization such as Trail of Bits.
For Paxos Tokens, customers will be able to purchase and redeem PAX virtual coins directly through the company's website platform at Paxos.com. According to the startup's press release, users of cryptocurrency exchanges such as itBit and OTC will be able to instantly exchange their Paxos Standard (PAX) tokens. At the same time, the ItBit platform also plans to organize over-the-counter (OTC) trading of PAX virtual coins.
Just like the Gemini stablecoin, the smart contracts of the PAX cryptocurrency have been audited by the independent auditing company Nomic Labs. A monthly audit of Paxos bank accounts takes place.
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Trading PAX
Currently, PAX's capitalization is $41.7 million. At the same time, daily trading volumes are very high: on October 15, when people were moving en masse from Tether to other stablecoins, the Paxos Standard issue increased from 24 million to 64 million in just a few days. True, after this the emission decreased by more than 20 million tokens, which indicates that they were exchanged by users for dollars. Now the average daily trading volume is about $20 million. This means that half of the tokens are used for trading daily.
The total number of issued tokens is currently 76 million. This entire volume of tokens is distributed between 509 wallets. The company said on Twitter that this is the best user adoption rate among all other competitors.
Recommendations for buying cryptocurrency
The main place for sale of this token is its parent cryptocurrency platform Paxos. In order to purchase this token, you will need to go through the registration procedure on this site in order to create a user account.
Despite the fact that this coin belongs to the stablecoin category, it is sold on many popular crypto exchanges. As in the case of the Paxos platform, purchasing this coin through crypto exchanges requires the need to go through a registration procedure, as well as replenishing a personal account using fiat money or popular cryptocurrencies.
As an alternative way to purchase this crypt, you can use special web resources that are online exchangers. With the help of such sites, any user will be able to exchange fiat money or crypto into PAX tokens without the need to register a user profile, which saves time and also maintains complete anonymity. It is worth remembering that due to the low demand for this coin, operations for its conversion are currently carried out with the preliminary exchange of fiat money into Bitcoins or Ethereum for the subsequent conversion of these cryptocurrencies into Paxos standard Token.
How PAX works
To start working with the Paxos Standard token, you need to register on the official website.
After you have created an account and linked Google Authenticator, you will be asked to go through verification. In addition to your address, name and date of birth, you will need to enter a personal identification number.
Next, you will be asked for a photograph with documents to confirm your identity and the accuracy of the entered data.
It is noteworthy that Paxos, apparently, does not provide its services to residents of Russia: it is simply not in the list of countries during verification. This means that citizens of the Russian Federation will not be able to pass verification, and in order to use tokens they will have to buy them on exchanges. However, you still won’t be able to exchange them for dollars through the official website, so it’s better to consider other stablecoins as a tool for switching from cryptocurrencies to fiat.
Where to buy Paxos
The token only appeared a month ago, but the number of trading platforms supporting it is truly impressive. PAX is available on Binance, OKEx, Kucoin, ZB, Gate.io, DigiFinex and OKCoin. It was this strong support from exchanges that provided the token with $20 million in daily trading volume.
The token became known to the general public after the head of the largest cryptocurrency exchange Binance, Changpeng Zhao, wrote about PAX on his Twitter. He stated that Paxos Standard is an alternative for those who are not satisfied with Tether's lack of transparency.
You can exchange for USD Coin (USDC):
- Zcash (ZEC) to USD Coin (USDC)
- Perfect Money EUR to USD Coin (USDC)
- Sberbank RUB to USD Coin (USDC)
- AdvCash RUB to USD Coin (USDC)
- Ethereum (ETH) to USD Coin (USDC)
- Vanguard RUB to USD Coin (USDC)
- Yandex.Money RUB to USD Coin (USDC)
- UkrSibbank UAH to USD Coin (USDC)
- Raiffeisen RUB to USD Coin (USDC)
- Cash RUB to USD Coin (USDC)
- TrueUSD (TUSD) to USD Coin (USDC)
- AdvCash EUR to USD Coin (USDC)
