Growing in Popularity
The world of blockchain has seen its fair share of stablecoins come and go. However, with recent levels of adoption, it would seem as though Paxos has managed to establish themselves as a mainstay.
They have done this through offering a variety of products. This includes not only their stablecoins, but through their settlement services. This article highlights a few of the recent events surrounding the adoption of these offerings.
Paxos Standard (PAX)
One of the most popular use cases for stablecoins are through lending platforms. Whether acting as collateral, or held in a high interest savings account, there is a clear demand.
PAX, in particular, just announced that market leading lending platform, BlockFi, has begun supporting their USD backed stablecoin. Much like other stablecoins on the BlockFi platform, those who opt to hold their PAX in a savings account will be rewarded with an 8.6% interest rate.
This new found support prompted commentary from representatives of each, BlockFi and Paxos.
Zac Prince, CEO of BlockFi, stated,
“We’re excited to support PAX on our platform and help expand stablecoin availability, with market leading yields, to BlockFi clients. As our respective platforms continue to grow, we expect to find more ways to collaborate.”
Walter Hessert, Corporate Strategy for Paxos, stated,
“Earning interest on assets is a key aspect of global finance. Having this opportunity in crypto is important to growing the overall marketplace and bringing maturity to this asset class. We’re pleased that PAX is now available on BlockFi and look forward to bringing stablecoins to more people around the world.”
For those interested in taking advantage of such high interest savings accounts, don’t worry about getting your hands on PAX, as it is quite easy. For example, Paxos notes that their popular stablecoin is available to purchase on over 100 different exchanges.
PAX Gold (PAXG)
While the concept behind PAX is similar to PAXG, there is one main difference. PAX is backed by USD, while PAXG is backed by physical gold.
Much like the former, PAXG has seen an uptick in adoption. This was most recently made apparent with the announcement that PAXG is available for trading through digital asset exchange, Smart Valor. As a result, by opening up the asset for trading on a popular exchange, holders of PAXG now gain access to higher levels of liquidity, and overall ease of access to PAXG.
Kyle Libra, Product Director at Paxos, stated,
“PAX Gold is a truly unique product – it is the fastest and easiest way to buy, own and trade the highest-quality physical gold. Given the volatile market environment, it’s important that investors around the world can access this safe haven asset quickly and easily – PAX Gold does just that. With Smart Valor, customers with GBP, EUR or Swiss Francs can now buy PAX Gold and trade that against the biggest cryptos.”
Olga Feldmeier, CEO of SMART VALOR, stated,
“The US dollar lost 93% of its value over the last 100 years. In a view of the recent decision by the US Federal Reserve to lower the benchmark interest rate to 0% and relaunch its quantitative easing program with $700 billion, the greenback is set for further devaluation. With the breakout of the coronavirus we also might be heading into the deep recession like the Great Depression of the 1930s. This is the time when investors are in dire need for a real alternative to protect their savings. Therefore, we decided to move forward with listing of tokenized gold on SMART VALOR exchange.”
The adoption of PAXG on a trading platform is not the only example of interest. Much like PAX, crypto-lending platforms are accepting this gold backed asset as a form of collateral. More specifically, PAXG is able to be used on, both, Nexo and SALT.
Paxos Settlement Service
While stablecoins may be their bread and butter, Paxos has been diligently developing ancillary services, as it looks to bring new efficiency to ‘legacy’ processes.
This can be seen through their, now live, settlement service. While development of this began years ago, the project only recently became a reality when Paxos was successfully awarded a ‘No-action letter’, by the SEC. This was, essentially, a statement made by the SEC that they would not take any enforcement action against Paxos upon launch of the service. This statement was released after the SEC evaluated their plan, and service capabilities.
Once receiving this news, in late 2019, Paxos wasted no time in going live. By early 2020 the company successfully went live with their first clients – Credit Suisse and Instinet Holdings. In our previous look at this settlement service, we touched on its main benefits.
- Access to Short Settlement Cycles
- Immediate Access to Settlement Proceeds
- Increased Data Accuracy and Visibility
- Security and Availability
At the time of launch, representatives from each, Paxos and Credit Suisse, commented.
Charles Cascarilla, CEO of Paxos, stated,
“Launching Paxos Settlement Service under No-Action relief is the first step in our journey to transform post-trade infrastructure in the securities industry. We’ve worked closely with Credit Suisse and Instinet to build a solution that can deliver long-term cost benefits and together we will refine the system in a live environment. Our upcoming application for clearing agency registration demonstrates our dedication to modernizing market structure on a large scale.”
Emmanuel Aidoo, Head of Digital Asset Markets at Credit Suisse, stated,
“The initiative has the potential to deliver great efficiency and cost savings to the post-trade cycle. Paxos Settlement Service introduces blockchain technology that’s compliant with regulations and allows us to take important strides towards evolving market structure and unlocking capital that is tied up in legacy settlement processes.”
Founded in 2012, Paxos maintains operations in New York City. Above all, the team behind Paxos strives to develop a variety of products which service varying markets. These range from Stablecoins, to post-trade activity, settlement capabilities, and more.
CEO, Charles Cascarilla, currently oversees company operations.
In Other News
Adoption by exchanges for the trading of, both, PAX and PAXG? Check. Adoption as collateral through lending platforms? Check. Adoption through eligibility for savings accounts? Check. Adoption of ancillary services surrounding trade securities settlement? Check.
It is fair to say that popular stablecoins may have a newly established rival.
Beyond products specific to Paxos, we have looked at Stablecoins as a group in the past. With their rise in popularity, we have seen potentially gimmicky concepts alongside high potential ones. The following article takes a look at a few of these.
Paolo Ardoino, CTO of Bitfinex & Tether – Interview Series
Paolo Ardoino is the CTO of Bitfinex & Tether.
Bitfinex is a digital asset trading platform offering state-of-the-art services for digital currency traders and global liquidity providers.
You’re currently the CTO of two of the most successful blockchain companies in the cryptocurrency space, Bitfinex and Tether. How did you find yourself in such an enviable position?
I started in the Bitcoin crypto space between 2012- 2013, not too early, not too late. I was able to enjoy quite a few runs in the space. At the time I was working in the traditional financial sector in London. I had my own startup, and my expertise was in building highly scalable applications as a part of computing and distributed systems. Of course, finance and scalable applications and what the system sees is a perfect match for Bitcoin. So as soon as I started reading about Bitcoin, I fell in love.
I was experimenting and getting more and more excited about Bitcoin. And then at the end of 2014, I had the opportunity to join Bitfinex. They had a problem with the matching engine. Given my expertise, I offered my help to build the matching engine to be more scalable, so we were able to achieve 1,000 times the previous number of transactions per second.
Then, I started getting a little bored with my company in London which was mired in traditional finance. The old, outdated protocols were no longer interesting and I wanted to do something that was related to Bitcoin and the crypto space. I saw this as a huge opportunity to do something that would matter in the long run — to help change the financial system itself and leverage the groundbreaking technologies based on blockchain.
In mid-2016 I became CTO of Bitfinex and worked hard to bring the platform to what is today. The beautiful interface, carefully designed and really robust, the matching engine and APIs were all a priority, as well as making it all highly scalable. This is basically still my role today. Apart from managing my team, I keep working on the core of the platform. In 2017, I became the CTO of Tether. Tether is the biggest stablecoin by market capitalization. It’s really one of the most amazing ideas in this sector. Everyone today talks about Tether, but it was really created by a group of visionaries and Bitcoin lovers in 2014. They had this great idea to solve the problem of arbitrage, especially efficient arbitrage across crypto exchanges. The arbitrage opportunities were really big, but the problem is that to exploit those, you have to move wires around different exchanges. It was really painful and really slow — it could take days! Tether was the solution for that and worked out beautifully.
Tether Gold is a token (XAU₮) that is pegged to physical gold. Where is this physical gold located and what’s the redemption process should an investor choose to redeem their tokens?
The physical gold is located in Switzerland and for security reasons I cannot give the exact location. In order to redeem Tether Gold, a holder must have enough tokens for a full bar of gold. In order to start the redemption process we normally ask that a customer have at least 430 Tether Gold tokens. We do that because 400 ounce gold bars aren’t actually 400 fine troy ounces — they vary in size from as small as 385 fine troy ounces and as big as 430 fine troy ounces.
When a holder wishes to redeem, we run an algorithm that “consolidates” their Tether Gold tokens onto one or more full gold bars. Those bars are then made available to the token holder for pick-up at the location of their choosing in Switzerland. From there, they can bring the gold wherever they want, according to travel rules and transport mechanisms and various rules of Switzerland and their jurisdiction. Alternatively, the token holder can ask us to try to sell their gold bar to a purchaser in Switzerland. If we’re able to sell it, the token holder will get the proceeds from that sale, less our fees, instead of the physical gold bar.
Why do you believe that gold stablecoins are necessary for investors?
We are seeing a period of uncertainty in the market. Thus, gold represents an interesting alternative to fiat cash. When there’s a lot of uncertainty in the financial markets, usually hedge funds go to cash, so they sell their assets and they try to minimize the volatility. They usually use cash for that, but gold is representing a sort of middle ground between keeping the investment in full — let’s say equities, stocks, cryptocurrency, whatever — that are super volatile and something that feels more volatile than cash of course that is more novel. Gold is this middle ground, and is also one of the assets we see becoming more active when there is geopolitical uncertainty.
Tether Gold recently surged to a $21 million market capitalization. Do you believe this is based on coronavirus fears? What else is driving this surge in interest?
It reached $21 million, but for me this is just a start. I believe that in the next few months we’ll see additional growth. As I said, gold is not just a really useful hedging mechanism for traders. Gold is a good way to hedge part of the risk when you have your assets under management. Tether Gold is a good way to hold gold because you are not charged annual fees based on your holdings of Tether Gold. I believe that the $21 million Tether Gold is still a small amount. Our vision is that Tether Gold will become a preferred way to hold gold. As gold is used as a hedging mechanism for large funds, we expect Tether Gold will continue to grow in popularity. There will be the need of much more Tether Gold as a result. So we should see more and more users acquire Tether Gold.
Can you share with us the current plans of integrating Tether (USDT) on the lightning network?
Bitfinex and Tether are funding a project called RGB Spectrum that is meant to develop a protocol to issue digital assets on top of the Lightning network. I believe that the moment the protocol is live, stable, and well-tested Tether will be one of the first to utilize this new protocol. That’s because Bitfinex and Tether believe that Bitcoin and Lightning network are really important technologies and the network is really scalable, purely peer-to-peer. It’s as decentralized a protocol for micropayments as it should be. The RGB protocol will be ready to launch Tether on top of it because that will complete our vision of having Tether enable peer-to-peer micropayments.
Over the past year we have seen many new USD stablecoins. Why should investors continue to use Tether over some of these new options?
I believe that the reason is that Tether has some first mover advantage. It started in 2014, and the first big competitor started in 2018. Tether had four years of technological advancement and business advantage. One of the key qualities of a stablecoin should be cross-chain interoperability. Our major competitors are working mainly on Ethereum, while for us it is important to try and to serve as many communities as possible. Ethereum has a big community, EOS has a big community. Other blockchains that we support like Algorand, and Liquid, and Tron have big communities, so realize that for a stablecoin to be complete and to be really useful it needs to be the common ground of different blockchains. That is a huge advantage that we believe our competition hasn’t realized yet.
Bitfinex recently replaced IEOs with Bitfinex Token Sales which is digital assets offering and launch solution for high-quality crypto projects. Can you share with us what this platform is exactly, and why entrepreneurs should use it versus launching an IEO on Binance, KuCoin, or other competitors?
First of all, you can see that Bitfinex didn’t launch many IEOs. They didn’t launch many projects because we know that most of the projects that were launched had really bad performance. We don’t want to replicate the errors made by other platforms. We are more careful, and did an enormous amount of due diligence before deciding to launch a project through our Bitfinex token sales platform. I believe that our approach is more professional and more thorough. Projects that we’ll launch will be part of a really exclusive platform and will be fully considered as a high quality project just for the fact that we were able to complete our thorough evaluation process. We want to make sure that whatever we list is a quality project that respects the fair valuation, and has a high utility so that the Bitfinex customers that will be interested in participating in the offering will be protected. To achieve this, we’ll already have done a lot of due diligence for them.
What type of projects will be featured on this platform?
There’s a wide variety of projects. There are artificial intelligence-related projects. There are games. There are tokens that aim to bring banking to the unbanked in a poor region. There are new blockchains interested to get adoption and prove themselves through the process. It’s really a huge variety of projects.
Are there any new exciting projects in the pipeline at either Bitfinex or Tether that we should be aware of?
At Bitfinex, we are working on many new features that are really important for our customers. We are focusing on options when it comes to our derivatives platform. We are launching new integrations with third party providers in the near future around lending. And we are going to create an advanced version of our renowned peer-to-peer margin lending platform that has been powering our margin trading platform since 2013. So there are many projects that we are working on, plus launching additional pilot projects built on top of Lightning network to help market makers to try out how to improve their trading strategies, exploiting fast live network pay settlements.
Is there anything else that you would like to share about either Bitfinex or Tether?
As a general thought, Bitfinex is one of the key companies in the crypto space that for many years fought and allowed the industry that we’re all a part of to grow in a steady manner. Bitfinex shielded a lot of the problems to the crypto industry, especially being an on ramp to fiat and helping raise funds. Bitfinex built many interesting projects, a really solid trading platform that is home to a lot of traders. Experiment was the first to support the Lightning network, so basically Bitfinex is showing a lot of love to Bitcoin. We believe that Bitfinex is working for Bitcoin rather than using Bitcoin to just create profit.
Libra Sees E-Commerce Giant, Shopify, Join The Ranks
After months of seeing companies distance themselves from Facebook and their subsidiary, Calibra, it would appear as though the endeavour is attracting new backers.
Today, the industry was greeted with news that e-commerce giant, Shopify, has decided to join the Libra Association; A move which may mark the return of other high-profile companies into the fray.
On the surface, it would appear as though the companies are a good fit. As a global e-commerce platform, Shopify stands to benefit greatly in the event that Libra becomes a globally accepted stablecoin. With this being the case, it only makes sense that supporting its launch is a given positive.
Upon announcing their decision to join the ranks of Libra, Shopify took the time to explain their decision to the world. The following is a brief excerpt from their statement, touching on their goals.
“Our mission is to make commerce better for everyone and to do that, we spend a lot of our time thinking about how to make commerce better in parts of the world where money and banking could be far better. That’s why we decided to become a member of the Libra Association. This is one step, but not the only step we’ll be taking to be a part of the solution to this global problem.”
Some may have, and continue to, doubt the project as a whole. Due to potential regulatory backlash, this doubt clearly found its way to several of the project’s founding members. Only time will tell if these companies made the appropriate decision in abandoning the project.
While the original founding members of Calibra totalled roughly 25, the following were the first high-profile participants to flee the coop:
PayPal, MasterCard, Visa, Stripe, and EBay.
Much of the aforementioned ‘loss of faith’ stems around the fact that no one quite knows how Libra will be classified.
For example, the project makes use of two tokens. The ‘Libra Investment Token’, which is obviously a security token, and ‘Libra’, which is being marketed as a stablecoin.
Due to the intimate nature of the two tokens, with the potential for Libra to influence the profitability of the Libra Investment Token, there are those in positions of power that believe both should be classified as securities.
While no decision has been made, to date, on official classifications, it is this on-going uncertainty that continues to potentially dissuade some from taking part in the endeavour.
Founded in 2006, Shopify maintains operations out of Canada’s capital, Ottawa. Since their launch, Shopify has established themselves as a giant within their industry of online commerce. They now find themselves employing thousands, with expansion seeing them serve 175 countries across the globe.
CEO, Tobias Lütke, currently oversees company operations.
Founded in 2019, Calibra is a subsidiary of social media giant, Facebook. Above all, the company was structured with the goal of supporting the anticipated Libra stablecoin, primarily by acting as a digital wallet.
CEO, David A. Marcus, currently oversees company operations.
A Timeline of Events
The importance and magnitude of the Libra project is through the roof. The entire world is watching to see what becomes of Facebook’s plans. Naturally, we have been watching, as well, and have been documenting the chain of events surrounding the project from day 1. The following articles provide a brief synopsis of the timeline, since Libra’s initial announcement. Make sure to peruse through them to gain a better understanding of how the project finds itself where it is today.
Circle Attempts to Sell SeedInvest, Doubling Down on StableCoin
Circle has long been a name intimately associated with the world of blockchain. Between the vocal nature of their leaders, touting the potential of the technology, and their high profile acquisitions over the past few years, they have often been a guiding light.
The company, however, appears to be in a state of flux, in recent months Circle has sold their interest in crypto exchange Poloniex, key personnel has left, and now, the potential sale of equity crowdfunding platform SeedInvest.
These are significant moves. The changes beg the question, do these developments represent the demise of Circle? Or a strategic restructuring paving the way for a brighter future?
SeedInvest No More?
There are rumblings that Circle intends to pivot their efforts away from crowdfunding. This pivot will reportedly involve the sale of recently acquired equity crowdfunding platform, SeedInvest.
While this has not been confirmed, it is being reported by the popular news outlet ‘The Block’.
It was not long ago that we first reported on the initial acquisition of SeedInvest. This was a move that caught the attention of many, as SeedInvest was one of the leading equity platforms at the time of acquisition. After being acquired by Circle, expectations were sky-high for what the company would achieve in the burgeoning sector.
Until recently, the brain trust at Circle was spearheaded by its pair of founders, which acted as ‘Co-CEOs’. This structure served the company well, since its founding in 2013, so it came as somewhat of a surprise in December 2019 when it was announced that Sean Neville, one of the Co-CEOs would be stepping down from his post.
It is believed that with the company reimagining their path forward, the time was ripe for changes in personnel as well. Neville recognized this, and took the opportunity to pursue new endeavours.
On-load / Off-load
Possibly, the downsizing event that garnered the most attention is the sale of Poloniex. This is primarily due to the fact that Circle acquired the exchange for a staggering sum, totalling over $400 million.
While the Poloniex dramatically improved during its time as a part of the Circle family, there was clearly more promise being shown in Circle’s other endeavours.
For more details surrounding the sale of the popular cryptocurrency exchange, make sure to peruse the following article.
We have seen Circle, in the months since, attempt to capitalize on each of these. While its investment in SeedInvest may (or may not) be coming to an end, its work in developing USDC stablecoin over the same time period has clearly paid dividends.
The company states in a recently released paper detailing stablecoins, “global stablecoins offer the potential for a dramatic opening up of participation in global economic activity”.
We took a closer look at Circle’s USDC stablecoin, its competitors, and how this asset class stands to reshape finance in the following article.
The following is a brief breakdown of the various strategic moves made by Circle in recent months.
Sale of crowdfunding platform ‘SeedInvest’ to …?
Sale of trading platform ‘Circle Invest’ to Voyager
Co-CEO Sean Neville steps down
Sale of OTC Desk to Kraken
Sale of cryptocurrency exchange ‘Poloniex’ to Asian investment group
While the various events discussed above may come across as steps backwards, there is still hope that Circle knows exactly what they are doing. These moves are, after all, based on the potential shown by USDC, and what it can offer not only Circle, but the overall world of blockchain.
It was not that long ago that most were praising the decision to purchase both, SeedInvest and Poloniex. We trusted Circle’s judgment then, despite how events unfolded, maybe we should trust them now? Time will tell.
Founded in 2013, Circle is a well backed, financial services, company, which maintains operations in Boston, Massachusetts. Above all, the team at Circle is focused on ensuring the success of their stablecoin offering ‘USDC’.
CEO, Jeremy Allaire, currently oversees company operations.
- Multiple Canadian Securities Regulators Warn Against Halifax & Associates
- Germany – Crypto Custody License Receives Push-back from Banks
- Central Bank of South Korea to Host 22mth Pilot for Potential CBDC
- Japanese Government Introduces New STO Regulations
- Lawsuits Goes After Some of the Largest Names in Crypto