Paxos PAX becomes USDP - A necessary move 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 the near absence of stablecoins indexed to the euro in Europe, the dollar stablecoins are much more numerous. Among them, Paxos’ PAX had a hard time finding its way.

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

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

On the same subject – USD Coin (USDC), the stablecoin dollar from Circle 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 USDP symbol will allow everyone to recognize the Pax Dollar as a stablecoin pegged to the US dollar. This will create more confidence in this token, which is much less well known than its direct competitors.

For that is the problem with Paxos. Renamed USDP or not, Pax Dollar is facing a lot of competition in the stablecoin sector.

Once shunned, they are now very popular. Indeed, they allow 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.

At the time of writing, Tether’s USDT is the fifth largest capitalization in the crypto asset market, Circle and Coinbase’s USDC is the eighth, and Binance USD (BUSD) is in the top 15. As for the now USDP, it is barely in the top 100.

So the competition is tough and it seems difficult to see USDP competing directly with the two giants USDT and 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 the USDP to take off? At least that’s what Paxos hopes. The company has always proclaimed its stablecoin to be the most secure of all. Paxos has in fact created reserves exclusively in US dollars and treasury bills.

In contrast, Tether has built up a large proportion of its reserves in debt securities tradable and other assets. If a large portion of investors ever want to sell their USDT back into another digital asset, Tether would not be able to honor the requests if its assets are not exchanged for “real” US dollars.

In practice, in the event of a crisis, some fear that the value of USDT would plummet if Tether failed to honor its commitments in the event of a sudden sale by a majority of investors.

However, this is all speculation and, at the moment, stablecoins seem to be an attractive investment in a bear market. Above all, Tether has shown a clean slate in recent months in response to accusations on this subject.

Read – Venezuelan buys property with USDT stablecoins – A growing trend?

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About the author : Benjamin Allouch

Paxos PAX becomes USDP - A necessary move to compete with other stablecoins?

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Lawyer specialized in digital and personal data law. 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.