Paxos International has introduced a new stablecoin called the Lift Dollar (USDL) that will earn interest. The USDL will be overseen by the Abu Dhabi Global Market (ADGM) and will generate overnight yield based on the interest Paxos International accrues on the assets backing it.
The USDL will be fully backed by liquid U.S. government securities and cash reserves in compliance with the regulations of the ADGM’s Financial Services Regulatory Authority. Instead of earning interest on these reserves, Paxos International will charge an issuer fee for the token.
Paxos International has announced partnerships with distributors Ripio, Buenbit, Manteca, and Plus Crypto to make the USDL available in Argentina. The company claims that the USDL is the first of its kind, and it will utilize an Ethereum smart contract with a rebasing mechanism to automatically distribute yield based on market conditions, estimated to be around 5%.
According to Paxos International, the USDL is the first regulated stablecoin that earns interest. In addition to earning interest through staking, restaking, and yield farming, stablecoin holders will have the opportunity to benefit from the USDL.
The USDL will not be accessible to residents of certain countries, including the United States, the United Arab Emirates outside of ADGM, the United Kingdom, the European Union, Canada, Hong Kong, Japan, or Singapore. Paxos International, based in New York, is authorized to issue other stablecoins like PayPal USD (PYUSD), Pax Dollar (USDP), and Pax Gold (PAXG) under the regulation of the New York Department of Financial Services (NYDFS). They previously issued Binance USD (BUSD) until facing potential regulatory action for issuing an unregistered security.
The ADGM, established in 2013 as a free economic zone within Abu Dhabi, has been expanding rapidly. It introduced comprehensive regulations for distributed ledger technology (DLT) in November and partnered with Solana to advance DLT technology in February. Companies like Chainalysis and Blockdaemon have opened offices in the ADGM, while digital asset firms such as Rain, M2, Laser Digital, Binance FZE, and QCE Capital have obtained licenses to operate within the ADGM over the past year.