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Pax Dollar (USDP) Overview: How to Buy and More
Stablecoins are one of the most interesting parts of the rising cryptocurrency sector, as they can allow for cross-border payments at much lower costs than traditional finance. Founded in September of 2018, Pax Dollar (USDP) is a fiat-collateralized stablecoin.
Like all stablecoins, Pax Dollar offers the advantage of transacting with blockchain assets through minimized price risk but has been audited thoroughly and they can prove their reserves. The Pax Dollar tokens are issued as ERC-20 tokens on the Ethereum blockchain and are collateralized 1:1 through the USD held in Paxos-owned US bank accounts, while also being available on Binance Smart Chain.
If you are looking to invest in stablecoins, our USDP review will help you decide if it is a good option
USDP Pros & Cons
Pros
Redeemable at any time at one-to-one ratio
Strictly regulated
100% cash reserves
Stable price
Cons
Dwarfed by competing stablecoins (USDT, USDC)
Will not appreciate in value
Not available on all exchanges
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USDP Ratings
Supply
- Total: No max
Network Speed
- Rating: Low-Medium
- Reason: ERC-20 token which means it uses the Ethereum blockchain, which can only process about 15 transactions per second in its current iteration. In order to have a fast transaction time you will have to pay a high gas fee in ETH. Its faster on Binance Smart Chain but less availability.
Disbursement
- Rating: Not Applicable
- Reason: Stablecoins are not secured by holding them, meaning that there is no risk of a negative attack if someone hold a large amount of the supply. This is in contrast to most other crypto assets, where holding a large amount can affect network voting.
Developer Engagement
- Rating: High
- Reason: Offers Stablecoin as a Service which lets partners leverage Paxos’ stablecoin expertise to create their own stablecoins quickly and securely. BUSD from Binance Exchange is an example.
Liquidity
- Rating: Medium-High
- Reason: On the cusp of being a top 100 crypto asset and is available on most of the top crypto exchanges but does not have nearly as much volume as other stablecoins such as USDT, USDC, or BUSD.
History of Pax Dollar
Pax Dollar (USDP) was created in 2018 by Paxos, who secured a New York State Department of Financial Services Trust Charter for Digital Assets in 2015. Paxos was founded by Charles Cascarilla and Rich Teo.
Paxos is fully regulated and has 100% cash reserves for their USDP product, and their Paxos Gold (PAXG) produce as well. As part of their services, Paxos also issues and maintains the reserves of Binance Exchange’s BUSD.
Where You Can Buy USDP
You can buy Pax Dollar (USDP) on most top centralized and decentralized exchanges including but not limited to:
- Binance Exchange
- Coinbase Exchange
- Uniswap
- 0x Protocol
- Mandala Exchange
Advantages of Pax Dollar
The main advantage of Pax Dollar is that there are verifiable cash reserves and USDP is subject to strict regulatory oversight by the New York State Department of Financial Services, meeting the highest standards of consumer protection.
This means there is essentially no risk that when you go to redeem your crypto dollars for fiat dollars the funds will be unavailable. Your Pax Dollars are always redeemable at a one-to-one ratio to the US Dollar.
Disadvantages of Pax Dollar
There are no real disadvantages to Pax Dollar, the only potential disadvantage to buying USDP is that it will hold its value whereas another asset may increase in value over time.
That being said, there are many ways to earn interest on stablecoins such as Pax Dollar that make it worth holding if you do not want the volatility of other crypto assets.
Pax Dollar Frequently Asked Questions
A stablecoin can increase in value, but there are generally mechanisms in place to return the price back to the stable peg. A stablecoin should not increase in value if it is functioning properly.
You can lose money investing in stablecoins if the peg the asset is tied to does not have the reserves to back it, or if you could have invested the stablecoins in a non-stable asset that goes up in value you “lose” money in that sense.
The main risk in stablecoins is that the issuer does not have the reserves to back up the supply they issue, meaning that you could go to redeem for USD, and they do not have the funds. This is not the case with Pax Dollar as they have been audited and can prove their reserves.
Paxos also offers Paxos Gold, and they are the issuer and custodian of Binance Exchange’s USD stablecoin BUSD.
Paxos uses the Ethereum and Binance blockchain networks, with the majority of their transactions taking place on Ethereum.
