Paxos International is set to launch a new stablecoin known as the Lift Dollar (USDL), which will accrue interest. This stablecoin will be overseen by the Abu Dhabi Global Market (ADGM) and will generate overnight yield based on the interest earned by Paxos International on the assets that secure it.
The USDL will be fully backed by liquid U.S. government securities and cash equivalents in accordance with the regulations of the ADGM’s Financial Services Regulatory Authority. Rather than earning interest on these reserves, Paxos International will charge a fee for issuing the token.
In a separate announcement, Paxos revealed that the USDL will be made accessible in Argentina through various distributors including Ripio, Buenbit, Manteca, and Plus Crypto. Paxos asserts that the USDL is the first of its kind in the market, offering interest-bearing stability while being fully regulated.
A smart contract on the Ethereum platform will utilize a mechanism called rebasing to automatically distribute yield on the USDL depending on market conditions. Reports suggest that the yield could reach around 5%. Paxos International stated that the USDL is the initial interest-bearing stablecoin that is regulated. Additionally, holders of stablecoins have the opportunity to earn interest through staking, restaking, and yield farming.
USDL will not be accessible to individuals residing in the United States, the United Arab Emirates outside the ADGM, the United Kingdom, the European Union, Canada, Hong Kong, Japan, or Singapore. Paxos International clarified that they produce PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) under the supervision of the New York Department of Financial Services (NYDFS). They had also issued Binance USD (BUSD) until facing potential legal action from the NYDFS and the United States Securities and Exchange Commission for offering an unregistered security.
The ADGM, established as a free economic zone within Abu Dhabi in 2013, has been experiencing rapid growth. It introduced extensive regulations for distributed ledger technology (DLT) in November and partnered with Solana to advance DLT technology in February. Various companies such as Chainalysis and Blockdaemon have established offices in the ADGM. Digital asset firms like Rain, M2, Laser Digital, Binance FZE, and QCE Capital have received licenses to operate within the ADGM over the past year.