Formerly known as the Paxos Standard Token (PAX), the Pax Dollar (USDP) is a stablecoin backed by the U.S. dollar. Find out more about it in this article.

 technology is revolutionizing the digital world and contributing to groundbreaking innovations in the crypto space, including the emergence of 

 ecosystem, Pax Dollar is one of a few fully regulated stablecoins designed to limit volatility and provide peace of mind to crypto investors looking for stable returns and consistent long-term growth. 

In this post, we shed light on the Pax Dollar stablecoin (USDP), the popular 

 token (PAXG) and the world’s leading compliance and regulation standards for each.

 is a blockchain ecosystem hosting a variety of fully regulated cryptocurrency products for individual traders, and institutional and enterprise customers seeking safer, less-volatile exposure to crypto markets.

As one of the only fully regulated blockchain ecosystems, Paxos is an umbrella platform hosting both the Pax Dollar stablecoin and the Pax Gold token. This crypto project offers full transparency and security surrounding the assets that back its USDP stablecoin, and Paxos aims to provide a seamless global payments system that serves to minimize the risks associated with market exposure.

The Paxos team envisions a progressive future in which blockchain technology isn’t just a driving force behind a financial revolution but a key element of its evolution. Paxos strives to eliminate the problems and improve the performance of the economic ecosystem by creating a fluid, frictionless global exchange system for both digital and real-world assets through the ubiquitous use of its stablecoin — Pax Dollar.

Formerly known as iBit, Paxos Trust Company, LLC, was founded in 2012 by Cedar Hill Capital Partners co-founder 

. With an impressive board including former U.S. Senator and Senate Finance Committee member 

, Paxos entered the U.S. market and launched its USDP stablecoin in May 2015 after receiving licensure from the New York State Department of Financial Services.

The name “Paxos” was chosen based on the legislative consensus system widely used on the Greek island of Paxos. Despite its antiquity, this system served as inspiration for the Paxos founders, who used the notion of computational consistency to develop the Pax stablecoin token, later known as Pax Dollar or USDP.

Backed by the U.S. dollar in accounts held at U.S. depository institutions, Pax Dollar was launched in September 2018, and later rebranded as the USDP stablecoin in August 2021. The PAX Gold token, which is tied to the value of gold rather than the U.S. dollar, was launched shortly thereafter to tokenize gold and provide customers with fractional ownership of the precious metal.

Today, some of Paxos’ partners include major companies and organizations from across the globe, such as 

In 2018, three years after securing a trust charter for digital assets from the 

, Paxos developed and launched Pax Dollar (USDP). Unlike other cryptocurrencies, Pax Dollar is fully regulated and backed 100 percent by cash reserves to give investors exposure to crypto without the volatility that typically comes with it.

The PAX Gold token was launched one year after Pax Dollar (September 2019). With full approval from the New York State Department of Financial Services, it became the first crypto asset redeemable for physical gold. By tokenizing the precious metal on the blockchain, PAX Gold has made it extremely easy for anyone to invest in actual gold, trade gold with minimal settlement risk and exchange PAXG tokens for both gold and fiat currency.

In 2021, Paxos rebranded the formerly known Paxos Standard Token (PAX) to Pax Dollar (USDP). Pax Dollar remains a borderless stablecoin developed for multiple use cases, such as commerce, trading, peer-to-peer transfer, and holding as an investment and store of wealth.

Since 2021, using blockchain technology and issued as ERC-20 tokens developed on the Ethereum network, the industry-leading Pax Dollar tokens are produced by Paxos to help mitigate crypto volatility, hedge inflation, eliminate cross-border transaction fees and issue payment for blockchain-based assets.

While several other stablecoins have come under fire for lack of transparency regarding the assets backing them, Pax Dollar remains one of the most regulated and recognized stablecoins in the entire crypto industry.

Pax Dollar (USDP) is designed to allow anyone, anywhere to send and receive U.S. dollar-based assets with substantially greater availability and flexibility than traditional financial-sector instruments. Additionally, the fees assessed for using Paxos to buy, sell and trade USDP are far less.

With Pax Dollar, you can seamlessly transfer assets across borders almost instantly and with absolutely zero discriminatory requirements. In other words, through the use of blockchain technology, Paxos is helping people break free from the shackles of financial bondage by offering a stable, decentralized value asset with minimal risk.

To exchange USD for Pax Dollars (USDP), whether for transactional or investment purposes, you need to deposit USD into a Paxos account. Then Paxos will use their 

 to generate USDP equivalent to your deposit amount. In turn, the minted USDP will be transferred and held in your account.

The process of exchanging USDP for USD is just as simple; in fact, it’s the same. However, after converting USDP to USD, the PAX coins are instantly burned and removed from circulation.

The minimum conversion amount is 100 USD, and unlike many other crypto platforms, Paxos doesn’t charge a fee for USDP conversion and redemption. All USDP stablecoin cash equivalents and reserves are stored safely in regulated accounts and are redeemable 1:1 for U.S. dollars anytime. 

Pax Dollar offers crypto traders and investors several key features designed to mitigate risk and maximize stability.

Since Paxos is a regulated trust, Pax Dollar is inherently more secure than most other cryptocurrencies and stablecoins on the market today. With legal permission to transfer assets with blockchain technology, additional transaction monitoring and using surveillance partners for another layer of compliance, transactions can be executed quickly and securely with zero risk.

’s Pausable contract module, which helps minimize risk through the use of tested libraries of Ethereum smart contracts. This means the Paxos platform can pause USDP approvals and transfers whenever a security threat is present.

Pax Dollar must operate under the strict regulatory oversight of the New York State Department of Financial Services. Therefore, USDP stablecoin users can be confident their insured crypto assets are in compliance and properly managed according to the “highest standards of consumer protection.”

Cryptocurrency in general will continue to rise in both usage and value as decentralization becomes more and more prominent over time. However, it’s reassuring to know that Pax Dollar is backed by the world’s largest fiat currency, the U.S. dollar.

According to Paxos, Pax Dollar is reviewed monthly by 

, a respected U.S.–based auditing firm. Each month, Withum must ensure that the supply of USDP matches the reserve supply of U.S. dollars that Paxos must hold to keep enjoying its highly regulated stablecoin status.

As already stated, Pax Dollar is backed 1:1 by the U.S. dollar. So, for every Pax Dollar issued, there is $1 held in an account to insure its value. In this regard, it’s similar to the 

 used by the U.S. to back the dollar until 1971.

Along the same lines, as a regulated trust chartered by the New York State Department of Financial Services, Paxos has a legal requirement to keep a cash equivalent of all stablecoin reserves in fully segregated, bankruptcy-remote accounts.

This requirement ensures that USDP stablecoin owners can always redeem their investments in U.S. dollars, or their reserve currency, and have access to their funds. Since Paxos corporate funds are kept separate from the funds of token holders, there’s no need to worry about their solvency — you’ll always be able to access your funds even if the company were to declare bankruptcy.

Aforementioned, Paxos holds its required reserves in cash so customer funds are kept safe and always available for redemption. The accounts are audited monthly by Withum, the respected third-party firm, to ensure everything matches up. With nothing but a smartphone, anyone can purchase or redeem Pax Dollars instantaneously anywhere, anytime. You don’t even need a bank account.

If you prefer stability and security over profit potential, Paxos’ USDP stablecoin is certainly interesting. Equally interesting, however, is the company’s other crypto token — Pax Gold (PAXG).

Similar to USDP, which represents $1, the PAXG token digitally represents one 

 of gold, stored in London’s high-security Brink’s vault. This presents an intriguing possibility for those seeking to own physical gold. Not only does the PAXG token allow you to do exactly that, but it also provides the liquidity of crypto combined with the security and immutability of blockchain technology.

For many, it’s a win-win. As an ERC-20 token built on the rock-solid Ethereum blockchain, you can move or trade PAXG anywhere in the world, or convert and redeem it in fiat currency or physical gold.

Just like USDP, PAXG is audited each month to ensure its token supply matches the gold assets held in its vaults. If that isn’t enough, the gold owned by each token holder is given an individual serial number, allowing you to trace your token back to the actual physical gold backing it.

With today’s uncertain economic conditions, gold’s safe-haven status is more prominent than almost ever before. In other words, Paxos may have struck actual gold with the release of PAXG in February 2021. In little more than a year, the token’s market cap shot up over 400 percent, outshining the market cap growth of the Tether Gold XAUt token by more than 150 percent over the same period of time.

Pax Dollar is specifically designed to have a growing number of use cases. Today, the stablecoin is primarily used to mitigate crypto asset volatility, reduce the friction involved with cross-border transactions and serve as a reliable means of payment for crypto, 

In the not-too-distant future, Paxos expects USDP to be used by consumers for making payments and held as a safe store of value, not just for U.S. token holders but for people around the globe.

As far as USDP’s tokenomics go, Paxos Trust Company, LLC, is the only entity able to alter the supply of Pax Dollars in circulation. There is no limit on the number of tokens the company can generate. That being said, new tokens are issued only when dollars are deposited into Paxos accounts.

When USDP is redeemed for cash from one of the segregated accounts, the tokens are destroyed immediately to ensure price stability and that the number of tokens in circulation matches the number of U.S. dollars held in reserve. This is how its 1:1 price ratio is maintained.

Withum audits Paxos monthly and publishes the reports citing its U.S. dollar reserves and the number of tokens in circulation.

Given the level of trust and credibility Paxos is receiving from traditional institutions such as Bank of America, Credit Suisse, PayPal and Mastercard, it’s safe to say the company’s regulatory approach has been paying off. In fact, as regulators around the world try to decipher cryptocurrencies, Pax Dollar may be the key to crypto’s mainstream adoption.

Currently, Pax Dollar is ranked seventh on the list of stablecoins with the largest market caps. However, its 400-plus percent growth in just over a year suggests it may be moving up the list. All in all, Paxos’ ethos of providing security, honesty and complete transparency in backing up USDP with both AU and USD makes the Pax Dollar stablecoin an increasingly enticing investment vehicle for many individuals.

Pax Dollar provides a safe, stable way for investors with little risk appetite to invest in crypto markets. As a Pax token holder, you can rest easy knowing you can redeem USDP 1:1 for U.S. dollars whenever you like. This backing, along with its charter and compliance with regulatory bodies, makes Pax Dollar a viable hedge against dollar inflation, economic uncertainty and crypto risks.

Beginner

672_Pax_Dollar_(USDP)-_The_World-Leading_Fully_Regulated_Stablecoin_1600x900.jpg

Pax Dollar (USDP): The World’s Leading Fully Regulated Stablecoin

Curious about how Frax Finance is innovating in the stablecoin space? With its fractional backing model, find out why it's one of the best stablecoins to date.

Frax Finance is the first hybrid stablecoin protocol backed by both collateral and algorithms. Think of it as the first on-chain central bank that controls the monetary policy of a fractional-algorithmic stablecoin called FRAX.

Because of its partially collateralized and algorithmic-pegged model, it has created a niche within the stablecoin space, breaking away from most other stablecoins that are either overcollateralized or entirely algorithmic.

FRAX is the first fractional stablecoin that aims to be scalable, decentralized and algorithmic money. It was founded by Sam Kazemian, Travis Moore and Jason Huan, who have created other Frax products such as the Frax Price Index.

What Is a Fractional-Algorithmic Stablecoin?

A fractional-algorithmic stablecoin has parts of its supply backed by collateral, such as USDC, and parts algorithmically stabilized.

The fractional model works to provide peg stability for the stablecoin, and can be used to defend the peg during 

 with no backing. This makes users feel more confident due to the blockchain’s transparent nature of showing how much collateral is behind the stablecoin.

The Frax protocol is able to maintain price stability using two main mechanisms: The FRAX stablecoin and its governance token, Frax Share (FXS).

As a fractionally collateralized stablecoin, FRAX is minted using both FXS and USDC. It is currently collateralized by USDC, and its collateralization ratio depends on the market price of FRAX. If FRAX is trading above the $1 peg, the protocol will decrease the collateral ratio to mint FRAX so less USDC is needed. Likewise, if FRAX is trading below the $1 peg, the protocol will then increase its collateral ratio to prevent a 

The protocol collects minting and redemption fees between 0.2 and 0.45 percent in FRAX, which allows the treasury to earn more during an increase in minting and redeeming FRAX.

The Frax protocol reinforces existing arbitrage and algorithmic mechanisms by implementing a new concept known as AMO, an autonomous contract that performs open market operations algorithmically to maintain FRAX’s peg. This basically enables the protocol to automatically capture arbitrage opportunities within its liquidity pools on the open market to stabilize its peg.

If the protocol has reached its current collateralization ratio after accumulating excess collateral, anyone can interact with it to redistribute value back to FXS holders, or increase the system collateral through its buyback and recollateralization functions.

Their native decentralized exchange, Fraxswap is the first automated market maker with time-weighted average market maker orders. It assembles orders over a period of time instead of all at once, allowing for a better average price with less slippage. This is used by the Frax protocol for rebalancing collateral and mints/redemptions, and for expanding/contracting FRAX supply and deploying protocol-owned liquidity on-chain.

Fraxlend is the stablecoin-lending facility that allows for permissionless lending, debt origination, customized noncustodial loans and onboarding of collateral assets to the Frax Finance economy. FRAX can then be minted into money markets, such as 

, to allow anyone to borrow FRAX and pay interest. The FRAX treasury earns from the interest paid by the borrowers. The platform allows anyone to create a market between a pair of ERC-20 tokens. Tokens provided by the Chainlink oracle can be lent to borrowers or used as collateral. When lenders deposit ERC-20 assets into the pair, they receive yield-bearing 

. Due to the interest that accrues over time, the fTokens can then be redeemed for increasing amounts of the underlying asset.

AMOs were launched in Frax v2 to create an automated process around the movement of FRAX and its collateral across DeFi ecosystems. The AMOs automatically leverage on Frax’s assets in a capital-efficient way by moving collateral, or FRAX, to different locations depending on the collateral ratio.

Frax has implemented 5 AMOs: Collateral Investor AMO, Curve AMO, Uniswap v3 AMO, Frax Lending AMO and FXS1559 AMO. They will loan or reclaim collateral automatically as the collateral ratio changes, and give 100 percent of all AMO profits back to 

 is the largest stablecoin pool on Curve. It recently overtook the fabled 3Pool — composed of DAI, USDC and USDT — that had previously held over $3 billion worth of liquidity.

As mentioned above, Curve AMO moves idle USDC collateral and new FRAX minted to the FRAX3CRV pool on Curve. The pool will earn trading fees, CRV and other LP rewards. Trading fees and LP rewards will be given to veFXS holders, while the CRV rewards will be used to boost the FRAX3CRV pool rewards.

The FPI is the second stablecoin of the ecosystem. It’s pegged to a basket of real-world consumer items to track inflation, keeping its price constant within the Consumer Price Index basket. Like FRAX, all FPI assets and market operations are on-chain and use AMO contracts.

It has a governance token that works like FXS does to FRAX, called 

 from the protocol, directing extra yield from the treasury to FPIS holders. Since the protocol is launched from within the Frax ecosystem, the FPIS token will also direct a variable part of its revenue to FXS holders.

FRAX is the stablecoin of Frax Finance. It’s partially backed by FXS and USDC and can be minted by providing both to mint FRAX.

The supply of FRAX is not fixed, and scales according to the supply and demand for the stablecoin. It has a current supply of 1.44 billion, which dropped from a previous high of 2.9 billion.

However, FXS also suffered soon after Terra collapsed, crashing over 75 percent to trade below $10. This was still well above the all-time low price of $1.50 in June 2021. FXS is currently trading between $5 to $7.

While FXS may not be doing well given the current market conditions, we could see FXS grow exponentially if FRAX were to start taking market share from USDC and USDT. Looking at the current state of crypto, here are some of the predictions:

Do keep in mind that FXS is heavily reliant on the performance of FRAX, and predictions serve only as a guide, and not advice.

FXS can be bought and traded on different crypto exchanges. Here’s how you can trade FXS as a derivative spot on Bybit:

 and verify it to complete the registration process.

 page. You’ll see several options to buy USDT: 

. Choose the option that’s right for you.

: After you’ve purchased USDT, click the 

 from the drop-down menu. You’ll be directed to the Perpetual trading terminal.

 trading pair on the left side of the trading platform, which usually displays BTC/USDT by default.

: Enter your long or short position and leverage size by filling in the values on the right side of the trading terminal.

If you’re looking to buy FXS on-chain, you can buy the cryptocurrency of your choice on Bybit and send it to a wallet such as MetaMask before swapping it for FXS on 

 feature on Fraxswap that allows you to swap between FXS, FPI and FPIS with low slippage over a selected period.

Frax Finance is an innovative stablecoin project with its algorithmic price stability mechanism. The FRAX stablecoin is one of the top decentralized stablecoins in terms of on-chain liquidity and peg stability. The protocol has a bright future with plenty of room to grow as they launch new products, such as the Frax Price Index, which solves the real-world need for an inflation-resistant stablecoin, and their upcoming money market that will increase the adoption of FRAX.

Intermediate

Frax_Finance_(FRAX)_Fractional_Algorithm_in_a_Stablecoin_1600x900.jpg

How Frax Finance Breaks Barriers With Its Fractional-Algorithmic Stablecoin

Hyped for GHO stablecoin? With Aave joining the stablecoin fray, here's everything you must know about the decentralized, multi-collateralized GHO stablecoin.

 by market capitalization, and features dozens of coins. While they operate differently, all stablecoins aim for the same goal: The promise of stability in the volatile crypto space. 

Because they were meant to be immune from market volatility, stablecoins have become popular as a means of global payments and a facilitator of DeFi lending and borrowing. 

 of the algorithmically pegged TerraUSD (UST) eroded trust in the stablecoin landscape, 

, a noncustodial market protocol, announced a new decentralized stablecoin, GHO.

Why is Aave creating the GHO stablecoin? This article examines the new project and what makes it unique.

GHO Stablecoin is a decentralized, multi-collateralized stablecoin pegged to the U.S. dollar. It was proposed by the Aave Companies (the team behind the Aave protocol) in early July 2022 and approved by the Aave DAO (

The new stablecoin will be backed by an assortment of user-selected cryptocurrencies and — most importantly — owned and governed by the Aave community, rather than a single entity. This decentralization is where it significantly differs from other stablecoins in circulation.

Aave Companies introduced the new stablecoin to increase stablecoin adoption by infusing more liquidity and stability into the fast-growing DeFi space. The Aave DAO earns all the interest accruing from GHO lending, providing them with additional revenue. 

Unfazed by the recent collapse of Terra and the resulting impact on the stablecoin market, Aave is betting on a game-changer with the GHO stablecoin.

Before we delve further into the GHO rabbit hole, let's take a peek at the protocol behind it.

Aave (Finnish for ghost) is an open-source decentralized lending protocol that allows users to lend and borrow cryptocurrencies. Aave runs on multiple blockchains including Ethereum, Fantom, Harmony and Avalanche. With a 

, its native crypto, AAVE (ranked 45 out of over 1,000 tokens) 

 from its recent bottom following the announcement of the GHO stablecoin proposal.

Aave and other DeFi lending protocols use smart contracts (bits of code that automate transactions), instead of centralized intermediaries like banks, to facilitate lending and borrowing activities. Essentially, there are no middlemen. When you borrow from Aave, you borrow directly from people who deposit their crypto assets with the protocol. The lenders, in turn, earn interest on their deposited digital assets.

Due to the volatile nature of crypto, borrowers have to overcollaterize — i.e., put up significantly more crypto than they’re borrowing for security. If the value of their collateral drops beyond a preset point, the smart contract will liquidate their collateral in order to cover their loan.

, Aave was originally launched as ETHLend in 2017 and rebranded to Aave a year later. Aave is owned and managed by a collective of token holders, known as the AaveDAO, who direct the path of the protocol through votes.

In the crowded DeFi space, Aave shines by allowing over 20 lendable crypto assets, giving users more options and flexibility. In addition, users can switch between fixed and variable interest rates when they borrow on the platform.

GHO stablecoin is created or minted when a user (or borrower) puts up collateral in a specified ratio. When the user repays the loan, the GHO protocol burns the returned GHO. The interest generated from the borrowed asset goes to the DAO’s treasury. The crypto assets used as collateral generate yield for the borrower.

Unlike purely algorithmically backed stablecoins — such as UST, which uses a complex stabilization mechanism of burning and mining the LUNA coin to keep its dollar peg — GHO proposes the use of “facilitators” who can generate and burn GHO tokens based on yet-to-be-disclosed mechanisms. The facilitator could be a protocol or an entity, and is approved by the Aave DAO. For control, the Aave governance will approve a “bucket” — the maximum GHO a particular facilitator can generate — for each facilitator.

Given the proliferation of stablecoins in the crypto space, you may wonder if there’s any point in launching yet another one. The proposed GHO stablecoin is not just another stablecoin. Aave aims to set the pace for decentralized, crypto-backed stablecoins with the introduction of GHO. A few of its defining features include: 

The GHO stablecoin shares similar characteristics with the popular DAI stablecoin (created by MakerDAO). Both tokens are decentralized and use overcollateralization to keep their peg to the U.S. dollar. However, GHO has the distinct advantage of using position-based minting instead of the collateral vault-specific minting used by DAI. Position-based minting supports more seamless and fairer position management than vault-specific minting. It also allows for better gas optimization.

Overcollateralized With Multiple Crypto Assets

The GHO stablecoin will be backed by a diversified range of cryptocurrencies accepted on the Aave platform and chosen by users. To mint GHO, users will have to deposit a higher value of crypto assets than GHO in a specific ratio. This system is referred to as overcollateralization. Overcollateralization ensures that the risk of GHO losing its USD peg is minimized.

Included in the GHO proposal are plans to integrate GHO with the Aave ecosystem by launching a specific GHO “aToken” and a GHO Debt Token. This system will use the same mechanism as other assets already on the Aave platform. The Aave-GHO integration will drive GHO’s growth on the Ethereum network.

While Aave Companies has stated that the new stablecoin intends to facilitate the growth of the global decentralized stablecoin market instead of competing, comparisons with more popular and established stablecoins will be inevitable. 

 stablecoin is a decentralized, crypto-backed stablecoin pegged to the U.S. dollar. One of the most popular stablecoins, DAI is the brainchild of Maker Protocol, a leading 

 a market capitalization of $7.3 billion, trailing behind USDC as the fourth largest stablecoin by market cap. DAI 24-hour trading volume at the time of publishing is $373,421,640.

Similar to GHO, users create DAI by depositing collateral crypto assets into Maker Protocol’s vaults. Also, like GHO, each DAI minted is backed by collateral with a far higher value than the DAI debt.

However, the makeup of DAI’s collateral structure consists mostly of USDC. Having a decentralized stablecoin primarily backed by a centralized stablecoin defeats the purpose of decentralization. It also subjects the DAI stablecoin to 

DAI uses a collateral vault-specific minting against GHO’s position-based minting. GHO’s position-based minting eases and ensures better position management while optimizing gas spending. 

The recent drama around stablecoins underscores the need for independent verification of claimed backing collateral. GHO’s first audit was carried out by 

 on July 11, 2022, right after development. DAI is no slacker when it comes to audits, either. The reputable Callisto Network conducts regular audits on DAI and the MakerDAO ecosystem. 

 hosted on the Terra blockchain and pegged to the U.S. dollar. Until its collapse in May 2022, LUNA, Terra blockchain’s native crypto, was on the list of top 10 assets by market capitalization, and UST was a leading stablecoin.

Unlike GHO and other decentralized stablecoins, UST wasn’t backed by crypto assets such as BTC or ETH. Instead, 

 to maintain its peg to the U.S. dollar. This stability mechanism works by allowing $1 UST to be redeemed for $1 LUNA. If the UST loses its peg to the dollar, it creates an arbitrage opportunity which — in theory — would incentive the market to regain the peg.

However, this played out differently in the real world, and a series of related events led to the UST depeg and subsequent collapse. UST’s failure has raised concerns over the safety of uncollateralized stablecoins, as well as calls for more regulation of the stablecoin space.

The Frax stablecoin (FRAX) is based on a fractional-algorithmic model. It's the only stablecoin that maintains its peg to the U.S. dollar with a partial collateralization structure. The other part of its supply maintains its peg algorithmically. The market pricing of FRAX determines the ratio of collateralized to algorithmic backing. When the price goes above $1, the protocol reduces the collateral ratio, conversely adjusting it upward when the price falls below $1.

The Frax Protocol consists of two tokens: The Frax stablecoin (FRAX) and the governance token, Frax Share (FXS). Like Aave, Frax is fully decentralized and uses a similar governance system.

The Frax stablecoin was designed to minimize overcollateralization risks. Overcollateralized stablecoins like GHO, which are backed wholly by crypto asset collateral, risk loss of stability when a 

 such as a flash-crash (sudden dip in the price of an asset triggered by massive sell-offs), takes place.

Frax stablecoin is also cheaper and more capital efficient from a supply perspective. Unlike GHO, which will be expensive to collateralize adequately, FRAX’s unique fractional-algorithm design allows it to cut costs (by partially using algorithmic means) to back the stability of the Frax stablecoin.

 24-hour supply of $8,938,553 and a market cap of $1.4 billion. It’s constantly audited, with the most recent one being conducted by 

Stablecoins track the value of other more stable assets, such as fiat or gold. Therefore, it doesn't make any sense to buy GHO for investment purposes since the price remains constant. However, GHO holders can use the stablecoin to hedge against inflation, while still earning interest on their deposited collateral.

The GHO stablecoin will also open up opportunities for investors to stake and earn rewards on the Aave Protocol and other DeFi protocols. Aave token stakers will enjoy a discounted rate on GHO borrowing, which will incentivize investors to help secure the Aave Protocol. This measure is expected to drive value to staked Aave (

With the first vote to approve GHO and make Aave the first facilitator out of the way, two more votes will be required before GHO goes live. The Aave community will be voting next on setting parameters, such as interest rates, collateral assets and caps, etc.

Aave plans to leverage grants and hackathons to promote mass adoption of the GHO stablecoin. The selling points will include the use of GHO as a reliable borderless and permissionless payment system. The development team also hopes that the rapidly growing Layer 2 ecosystem, with its low transaction fees, will provide fertile ground for more developments, involving the widespread use of GHO.

Aave Companies have proposed a new stablecoin, GHO, even though the dust from Terra’s implosion has hardly settled.

The GHO token will be overcollateralized, with multiple crypto assets, which should provide some comfort following the recent events in the stablecoin market.

Instead of competing, the fully decentralized GHO is expected to bring more liquidity and growth to the decentralized stablecoin market, as well as more revenue for the Aave protocol.

673_What_Is_GHO_&_Why_Aave_Is_Creating_a_Decentralized_Stablecoin_1600x900_(1).jpg

What Is GHO & Why Is Aave Creating a Decentralized Stablecoin?

What if a stablecoin is hard-coded to eliminate volatility? Enter DJED, the project that's claiming to solve algorithmic stablecoins' longstanding issues.

is constantly growing. It is hard to keep up with what is happening in the world of digital currency.

ecosystem has significantly matured over the last few years. 

participants use stablecoins for everyday transactions because they allow seamless money transfer, regardless of the location of the sender and recipient. Many investors are looking to invest, and they want to know the best choice.

DJED is a promising project that could become a leader in its field. According to some, DJED is currently the most advanced 

in the crypto space as it ensures price stability through formal verification. The addition of DJED to the 

 is expected to significantly improve the 

available worldwide. More than 300 million people own cryptocurrencies, and over 200 crypto exchanges offer 6000 different types of cryptocurrencies.

The major announcement coming out of the 2021 Cardano Summit was the launch of a 

 named Djed. This stable coin is run transparently through the blockchain, where anyone can verify what is happening. A cryptocurrency tied to a stable asset is a stable coin, such as gold or the US dollar, and can simplify the exchange in a volatile market.

In this article, we'll talk about DJED, a new stablecoin, how it's different from other cryptocurrencies, and whether or not it is worth investing in.

The COTI (Currency of The Internet) payment solution provides high transaction throughput with low transaction fees. 

, is used to enable high-speed transactions. COTI will allow around 10,000 

, far more than VISA, which supports peak hour demand of 4,000 transactions per second.

Through a unique combination of distributed ledger technologies and traditional payment systems, COTI hopes to set up a next-generation decentralized payment system that is instant, secure, and cost-effective. 

 are two of the most pressing challenges in current blockchain technology that COTI addresses through its DAG model.

COTI stands out from other payment solutions by providing the following:

COTI enables merchants to accept payments quickly and at an affordable rate, directly through merchant-facing tools, without relying on financial intermediaries. The network is capable of processing 100,000 transactions per second, maintaining as much security and stability as traditional payment methods and blockchains. Furthermore, the platform utilizes the Trust Chain Algorithm to prevent user errors and fraud.

Scaling blockchain-based ledger protocols, like 

, without consuming more energy is challenging. To solve the problem of scalability, COTI uses DAGs. COTI's DAG is called the Cluster, with each transaction represented by a Trust Score.

Adding a token transaction to COTI's ledger requires linking it to two prior transactions with the same Trust Score threshold. The Trust Score correlates with the confirmation time of the transaction. Users with a high Trust Score get faster confirmation and more transaction throughput.

In addition to meeting consumer payment needs and market demand, COTI offers a comprehensive solution that addresses merchant and consumer needs. The main features of COTI are:

With DAGs, similar to tree structures, you can store more data and validate more transactions efficiently and simultaneously. A higher network utilization results in more scalable networks. By using a 

, users get instant and fee-free transaction processing, i.e., there is no need to wait for one transaction to finish before starting another.

The COTI proof-of-trust algorithm, which combines the PoW and Trust Chain algorithms, provides a practical, energy-efficient alternative to the 

problem by assigning Trust Scores to each network user. COTI intends to encourage good network behavior to reduce fees and raise service standards.

New transactions must link to the two previous ones, thus forming a chain called Trustchain. Using Trust Scores, the Trustchain algorithm determines the amount of proof-of-trust necessary to confirm a transaction. The system rewards users with a higher trust score with quicker confirmations.

The COTI MultiDAG on top of the Trustchain produces fiat-collateralized, crypto-collateralized, non-collateralized, and other 

. Companies can create their coins for trading on COTI's network. The companies can use dedicated coins to reward participants by offering coupons, discounts, etc.

are similar ecosystems. At the transaction layer, the ClusterID identifies one Cluster from another within the COTI MultiDAG. Each COTI MultiDAG cluster adheres to the same validation and 

, creating a decentralized crypto world with a wide range of tokens.

 are on-chain and decentralized, similar to Ethereum's smart contracts. Each step of smart execution is documented in a COTI MultiDAG cluster and validated by multiple 

 before receiving confirmation. Since the DAG is a block-less network, there is no 

, and the COTI smart contract operates at a low cost.

 account can process online and offline payments in crypto and fiat. It offers users the option of using credit cards and merchant-specific coinage. Additionally, users can earn interest on deposits and apply for business 

 payments, loyalty points, crypto-fiat purchases, and cashback rewards. Through COTI Pay, merchants can upgrade their payment infrastructure with less difficulty, eliminate intermediary costs, and expand their business opportunities.

Cryptocurrency volatility is a considerable obstacle to mass adoption. Since the value of cryptocurrency can fluctuate considerably in seconds, it is not suitable for everyday exchanges.

is the first to ensure price stabilization through formal verification. The term stablecoin refers to cryptocurrencies tied to fiat currencies such as the US dollar or Euro and commodities like gold and silver.

The Djed protocol is mathematically verifiable and does not require a bank like some other stablecoins. Due to the DJED 

contract, a smart contract is responsible for buying and selling DJED in the market to maintain a stable value.

 ensure price stabilization, thereby making the coin useful for 

. Thus, a smart contract will automatically issue more coins as the price increases. The smart contract buys more if the price falls, thereby helping push it back up. It keeps a reserve of base coins to ensure a stable price and minting and burning stablecoins and reserve coins.

DJED stablecoins are suitable for many purposes such as payments, lending, payroll, settlements, alternate banking, remittances, etc.

As an alternative banking method, this is beneficial to underbanked businesses that are unable to open bank accounts, thus, allowing them to secure assets. 

 give users complete control over their funds and prevent them from being affected by bank failures or limited bank hours.

The value of stablecoins is designed to be stable over time. Due to this feature, they are ideal safe-haven assets, unlike cryptocurrencies such as 

, whose prices fluctuate dramatically. People who use stablecoins to store value are not at the risk of losing their possessions, especially since they have complete authority over them.

Overseas workers who wish to send money home face challenges with cross-border payments and remittances because international 

fees are high. Solutions such as cryptocurrencies demonstrate the benefits of blockchain technology in remittance. Stablecoins, however, might reduce the cost even further due to their inherent price stability.

 with a unique mechanism that will maintain the algorithmic peg of DJED while providing an incentive to SHEN token holders in the long term.

By buying and selling SHEN, users are able to maintain the peg of DJED to USD while earning a share of transaction fees in the reserve pool. Since SHEN is a 

Altcoins

Blockchain

Crypto

DeFi

GameFi

Indicators

Investing

Metaverse

Memes

Options

Stablecoin

Staking

Strategies

Trading

Web 3.0

Stablecoin

Stablecoin

Pax Dollar (USDP): The World’s Leading Fully Regulated Stablecoin

Stablecoin

How Frax Finance Breaks Barriers With Its Fractional-Algorithmic Stablecoin

Stablecoin

What Is GHO & Why Is Aave Creating a Decentralized Stablecoin?

Stablecoin

What Is DJED: The Algorithmic Stablecoin Backed By SHEN and ADA

Stablecoin

12 Best Stablecoins To Invest In During Volatile Times

Stablecoin

GBP Stablecoin (GBPT): The First Pound Sterling–Backed Coin

Altcoins

USDT vs. USDC vs. BUSD: How Are They Different?

Stablecoin

What Is USDD: The 30% APY TRON Stablecoin From Justin Sun

Stablecoin

What Are Algorithmic Stablecoins? (Lessons Learnt From The UST/LUNA Crash)

Stablecoin

TrueUSD (TUSD): A Truly Reliable Stablecoin

Stablecoin

Explained: TerraUSD (UST)

Altcoins

Reserve Rights (RSR Coin): The Promise of a Stable Future