[Serenity Premium] USDP By Paxos [Initial Review Mar 2023]

Pax Dollar (USDP) is a stablecoin created by Paxos, a licensed trust firm and financial institution that ensures the token is backed 1:1 by US dollar deposits. Like other fiat-based stablecoins, USDP combines the stability of fiat money with the advantages of digital assets, such as instant global transactions and programmability. It is hosted on the Ethereum blockchain as an ERC-20 token and is regulated by the New York State Department of Financial Services. In this paper, we analyse the Curve/Convex pool of USDP-3CRV, with a primary focus on the safety of USDP itself.

The Strategy in this Article

This strategy is providing liquidity into Convex Finance's USDP-3CRV Pool on the Mainnet.

Current yield: 17.9%, forecast 36.3% (21 March 2023)

Our risk assessment: Low

Our yield projection based on this week's Benchmark Yield: 11.8%

*There are two USDP pools on Curve/Convex, the other one being USDP by Unit Protocol. We are referring to USDP by Paxos, with the address 0x8e870d67f660d95d5be530380d0ec0bd388289e1

The Concept and How the Protocol Works

Paxos Overview

Paxos, the company behind USDP, was founded by Charles Cascarilla and Rich Teo in 2012. It is regulated by the New York State Department of Financial Services (NYDFS). It provides a variety of financial cryptocurrency products and services to small and large-scale enterprises. Key offerings and services provided by Paxos include:

1. itBit Crypto Exchange: itBit is a regulated digital asset exchange that allows users to trade various cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and PAX Gold.

2. Paxos Crypto Brokerage: This service enables businesses to integrate cryptocurrency buying, selling, and holding capabilities into their existing applications, providing an easy way for businesses to offer cryptocurrency services to their customers.

3. Custody Services: Paxos offers custody solutions for digital assets, ensuring secure storage and management of cryptocurrencies for institutions and enterprises.

4. Settlement Services: Paxos provides settlement services for enterprises, including securities and commodities, leveraging blockchain technology to facilitate faster and more secure settlements.

5. Stablecoin as a Service (USDP and BUSD): This product allows institutions and enterprises to create and manage their own branded stablecoins, leveraging Paxos' regulatory compliance and technology infrastructure.

6. PAX Gold (PAXG): PAX Gold is a digital token representing physical gold, where each token is backed by one fine troy ounce of London Good Delivery gold. This allows users to own and trade gold digitally while maintaining the stability and value of precious metal.

The company has raised over $500 million in funding from prominent investors, including Mithril Capital, Declaration Partners, and PayPal Ventures. Its clients include major payment companies such as Revolut, StoneX, and PayPal.

The USDP

The Pax Dollar was initially launched as Paxos Standard in September 2018 before being rebranded as USDP in August 2021. It's designed to be fully fiat-backed.