What is Pax Dollar (USDP)?

Quick Facts

  • Issued by Paxos Trust Company, a regulated financial institution
  • Pegged 1:1 to the U.S. Dollar
  • Reserves held in cash and cash equivalents, including U.S. Treasury bills
  • Regulated by the New York State Department of Financial Services (NYDFS)
  • Originally launched in 2018 as Paxos Standard (PAX)
  • Rebranded to Pax Dollar (USDP) in 2021
  • Available on Ethereum and other major blockchain networks
  • Monthly independent attestations verify reserve backing

Introduction

Pax Dollar (USDP) is a fiat-collateralized stablecoin designed to combine the stability of the U.S. dollar with the speed and programmability of blockchain technology. Issued by Paxos Trust Company, it was among the first regulated stablecoins ever brought to market.

USDp targets users, businesses, and developers who need a reliable, compliant digital dollar for payments, settlements, and decentralized finance (DeFi) applications.

History & Background

Paxos was founded in 2012 by Charles Cascarilla and Rich Teo. In September 2018, the New York State Department of Financial Services granted Paxos a Trust charter — one of the first such approvals for a crypto company — enabling it to issue regulated digital assets.

Later that same month, Paxos launched Paxos Standard (PAX), the token that would eventually become Pax Dollar. In August 2021, Paxos rebranded the token to USDP, reflecting its clearer identity as a U.S. dollar-backed stablecoin.

How Pax Dollar Works

USDp operates on a straightforward mint-and-burn model. When a user deposits U.S. dollars with Paxos, an equivalent number of USDP tokens are minted on-chain. When a user redeems USDP, those tokens are burned and the corresponding dollars are returned.

Reserves are held 100% in cash and cash equivalents in segregated accounts at U.S. depository institutions. This makes them legally protected from Paxos's own liabilities — a key feature that distinguishes USDP from less-regulated alternatives.

Independent auditors publish monthly attestation reports confirming that reserves fully match the outstanding token supply.

Tokenomics

USDp follows a fully collateralized economic model. Each token in existence is matched by a corresponding dollar held in reserve. Tokens are minted only upon deposit and burned immediately upon redemption, so the supply always reflects actual backing.

The SupplyControl smart contract governs all minting and burning, with designated controllers managing the process. Paxos also retains the ability to pause transfers in the event of a critical security threat, reflecting its centralized but transparent governance approach.

Circulating supply ? 45.56 million USDP
Reserved supply ? 0 USDP
undistributed
0xc2783c05c6b28b585f05093ef65e595388b47d89
0 USDP
undistributed
0xde3dfb9352fcba9c53abff7b3adfdd640662369a
0 USDP
Total supply ? 45.56 million USDP
Max supply ? -- USDP
Updated 4d ago

Ecosystem & Use Cases

USDp is integrated across a wide range of DeFi protocols, exchanges, and payment platforms. It can be used as collateral in lending markets like Aave, where NYDFS-regulated stablecoins qualify under specific compliance frameworks that exclude offshore alternatives.

For institutions, USDP enables settlement between U.S.-licensed entities without leaving the domestic regulatory perimeter — valuable for crypto exchanges, custodians, and broker-dealers. Paxos also positions USDP as a tool for cross-border payments and global commerce.

Team, Governance & Community

Paxos Trust Company is headquartered in New York and operates as a regulated trust company under NYDFS supervision. The team includes financial industry veterans and compliance experts. Paxos also issues other stablecoins, including PYUSD (for PayPal), demonstrating its role as a broader stablecoin infrastructure provider.

Governance of USDP is centralized within Paxos, with the company responsible for reserve management, compliance, and smart contract upgrades.

Advantages

  • Regulated and compliant: Full NYDFS trust charter provides strong legal protections
  • Bankruptcy-remote reserves: Customer funds are held in segregated accounts
  • Transparent: Monthly third-party attestations confirm 1:1 backing
  • Audited smart contracts: Multiple independent security audits by reputable firms
  • Broad compatibility: Available on major blockchains and DeFi protocols

Risks & Challenges

  • Centralization risk: Paxos controls minting, burning, and can pause transfers
  • Regulatory risk: Changes in U.S. or global stablecoin regulation could impact operations
  • Adoption competition: Competes with larger stablecoins like USDT and USDC for liquidity
  • Single-issuer dependency: Users must trust Paxos to maintain reserves and operations

Long-Term Vision

Paxos envisions a future where digital assets, commodities, and securities can be transferred anywhere, at any time, without friction. USDP serves as a foundational building block in that vision — a fully regulated, transparent digital dollar that bridges traditional finance and the blockchain ecosystem.

As regulatory clarity around stablecoins continues to develop globally, Paxos is actively expanding its reach into new markets, positioning USDP as a trusted standard for compliant digital dollar transactions worldwide.

Frequently Asked Questions

Pax Dollar (USDP) is a regulated U.S. dollar-backed stablecoin issued by Paxos Trust Company. Each USDP token is pegged 1:1 to the U.S. dollar and backed by cash reserves held at regulated U.S. depository institutions.

USDP is issued by Paxos Trust Company, a New York-based financial institution operating under a trust charter granted by the New York State Department of Financial Services (NYDFS). Paxos is also the issuer behind PayPal's PYUSD stablecoin.

USDP maintains its peg through a mint-and-burn model. When dollars are deposited with Paxos, an equivalent amount of USDP is minted; when USDP is redeemed, those tokens are burned and dollars are returned. Reserves are held 100% in cash and cash equivalents.

Paxos publishes monthly attestation reports from independent accounting firms confirming that reserves match the outstanding USDP supply. These reports are designed to provide transparent, verifiable proof of backing.

USDP is primarily available on Ethereum, where it operates as an ERC-20 token, and also has a presence on BNB Smart Chain and other networks. The Ethereum contract address is 0x8e870d67f660d95d5be530380d0ec0bd388289e1.

USDP is distinguished by its NYDFS trust charter, which provides stronger regulatory protections and legally segregated, bankruptcy-remote reserves. This makes it a preferred option in certain institutional and DeFi contexts where regulatory compliance is essential.

Paxos Standard (PAX) was the original name of the token when it launched in September 2018. In August 2021, Paxos rebranded it as Pax Dollar with the ticker USDP to better communicate its identity as a U.S. dollar-backed digital asset.

Yes, Paxos retains the ability to pause USDP transfers in the event of a critical security threat. This centralized control is a deliberate design choice that supports compliance but also represents a trade-off in terms of decentralization.