Paxos International is introducing a new stablecoin named the Lift Dollar (USDL) that will accrue interest. The USDL will be overseen by the Abu Dhabi Global Market (ADGM) and will generate overnight yield from the interest earned by Paxos International on the reserves supporting it.
Backed at a 1:1 ratio by liquid U.S. government securities and cash equivalent reserve assets held in compliance with the rules of the ADGM’s Financial Services Regulatory Authority, the USDL will not generate interest on these reserves. Instead, Paxos International will impose an issuer fee for the token.
Additionally, Paxos revealed that the USDL will soon be accessible in Argentina through distributors Ripio, Buenbit, Manteca, and Plus Crypto. Paxos asserts that the USDL is a unique creation, being the first regulated stablecoin of its kind.
Utilizing an Ethereum smart contract mechanism known as rebasing, the USDL will automatically distribute yield based on market conditions, with Bloomberg estimating the yield to be around 5%. Paxos International stated in a press release that the USDL is the inaugural interest-bearing, regulated stablecoin. Generally, stablecoin holders can also earn interest through staking, restaking, and yield farming.
USDL will not be available to residents of the United States, the United Arab Emirates outside the ADGM, the United Kingdom, the European Union, Canada, Hong Kong, Japan, or Singapore, as per Paxos International. Based in New York, Paxos issues PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) under the regulation of the New York Department of Financial Services (NYDFS). Previously, it minted Binance USD (BUSD) until facing potential action from the NYDFS and the United States Securities and Exchange Commission for issuing an unregistered security.
The ADGM, a free economic zone established within Abu Dhabi in 2013, has seen rapid growth. It introduced comprehensive distributed ledger technology (DLT) regulations in November and collaborated with Solana to advance DLT technology in February. Notable firms like Chainalysis and Blockdaemon have established offices in the ADGM, while digital asset companies like Rain, M2, Laser Digital, Binance FZE, and QCE Capital have obtained licenses to operate in the ADGM over the past year.