Paxos PAX becomes USDP – A necessary initiative to compete with other stablecoins?

Paxos renames its PAX to Pax Dollar (USDP)

Stablecoins have been on the rise for several months. If we can regret in Europe the virtual absence of stablecoins indexed to the euro, the dollar stablecoins are on the other hand much more numerous. Among them, the PAX of Paxos was struggling to find their way.

Can a name change change the established order? In any case, this is what Paxos Trust Limited hopes, the New York-based company that created PAX. The latter has just been renamed to Pax Dollar and its USDP symbol is reminiscent of Tether (USDT) or USD Coin (USDC).

From now on, the USDP will necessarily be recognized as a dollar-indexed stablecoin just like its competitors. For specialists, confusion with Pax Gold (PAXG), Paxos’ other token which is indexed to the price of an ounce of gold, will now be a thing of the past.

πŸ‘‰ On the same topic – USD Coin (USDC), Circle dollar stablecoin and Coinbase

Will the name change to USDP be enough to compete with other stablecoins?

According to Walter Hessert, chief strategy officer of Paxos Trust Limited, the symbol USDP will allow anyone to recognize the Pax Dollar as a stablecoin pegged to the US dollar. This will thus generate more confidence in this token, which is much less well-known than its direct competitors.

Because this is the problem with Paxos. Renamed USDP or not, the Pax Dollar faces significant competition in the stablecoin industry.

Formerly shunned, they are now very popular. They make it possible to be an anti-volatility remedy and the advent of staking has made it possible to generate significant passive income thanks to these same stablecoins.

As of this writing, Tether’s USDT is the fifth largest market cap in the cryptoassets market, Circle and Coinbase’s USDT is eighth, and Binance USD (BUSD) is in the top 15. As for the now USDP, it is barely in the top 100.

The competition is therefore fierce and it seems difficult to see the USDP coming into direct competition with the two giants that are the USDT and the USDC. As for the BUSD, its particularity is that it is issued by Paxos in partnership with Binance. But it is the aura of the latter that allows the presence of the token in the top 15.

The security of the Pax Dollar, the advantage of the USDP over other stablecoins

What if security would allow USDP to take off? In any case, this is what Paxos hopes for. The company has always claimed that its stablecoin is the most secure of all. Paxos has in fact created reserves exclusively in US dollars and Treasury bills.

On the contrary, Tether has built up a large proportion of its reserves in negotiable debt securities and other assets. If ever a large portion of investors wanted to resell their USDT for another digital asset, Tether could not honor the demands if its assets were not exchanged for β€œreal” US dollars.

In practice, in the event of a crisis, some fear that the value of the USDT will plunge if ever Tether does not honor its commitments in the event of a sudden sell-off by a majority of investors.

However, this is all guesswork and at the moment stablecoins seem to be an attractive investment in a bear market on the contrary. Above all, Tether has shown its feet in recent months to respond to accusations about it.

πŸ‘‰ To read – Venezuelan buys real estate with USDT stablecoins – A growing trend?

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About the author: Benjamin Allouch

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Lawyer specializing in digital law and personal data. He quickly became interested in bitcoin and blockchain technology, and founded the blog bitcoin-blockchain.fr. He is interested in the emergence of blockchain law and the legal consequences of this technology.
All articles by Benjamin Allouch.

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