Paxos International has announced the expansion of its yield-bearing stablecoin, Lift Dollar (USDL), onto the Arbitrum network. This launch provides users and developers in the Arbitrum ecosystem with a regulated, dollar-backed digital asset that offers daily yield distribution along with fast and cost-effective transactions.
USDL combines the price stability of the U.S. dollar with the efficiency and transparency of blockchain technology. It is designed to offer a secure and compliant way for users outside restricted jurisdictions to earn yield on their stablecoin holdings without engaging in traditional DeFi protocols.
What Is Lift Dollar (USDL)?
Lift Dollar (USDL) is a regulated stablecoin fully backed by U.S. dollar deposits, short-term U.S. Treasuries, and cash equivalents. Each USDL token is redeemable on a 1:1 basis for U.S. dollars. What sets USDL apart is its built-in yield mechanism—holdings automatically increase daily based on returns generated from its reserve assets.
The stablecoin is issued by Paxos International, a entity regulated by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM). All reserve assets are held in segregated accounts and are subject to strict custody and prudential oversight.
Benefits of USDL on Arbitrum
The integration of USDL into the Arbitrum ecosystem brings several advantages:
- Low-Cost Transactions: Users can transfer and use USDL with significantly lower gas fees compared to the Ethereum mainnet.
- High Speed: Arbitrum’s Layer-2 technology ensures fast transaction finality, improving the user experience for trading and payments.
- Native Yield: Holders earn daily yield directly in their wallets without needing to stake, lend, or provide liquidity.
- Regulatory Clarity: As a regulated stablecoin, USDL offers a compliance-friendly option for developers and institutional participants.
This move enhances Arbitrum’s growing DeFi, gaming, and social application landscape by introducing a safe and yield-generating digital dollar.
Official Statements on the Launch
Ronak Daya, Head of Product at Paxos, emphasized the significance of this deployment:
“USDL combines the stability of US dollars with blockchain efficiency, democratizing access to safe yield. By expanding to Arbitrum, we're offering Ethereum-level security with faster, cheaper transactions. We're excited to unlock new possibilities for the Arbitrum community.”
A.J. Warner, Chief Strategy Officer at Offchain Labs, also commented:
“Adding a regulated, yield-bearing stablecoin to the Arbitrum network will allow ecosystem innovators to build the next generation of applications. Stablecoins are a critical asset class for Arbitrum’s DeFi environment, and USDL is a welcome addition that will help drive new standards.”
How USDL Works
USDL operates on a simple and transparent model:
- Asset Backing: For every USDL in circulation, there is an equivalent U.S. dollar or high-quality liquid asset held in reserve.
- Yield Generation: The reserve assets earn interest, primarily from U.S. Treasuries and other cash equivalents.
- Daily Distribution: This yield is distributed automatically to all holders daily. Their token balance increases directly in their wallets, reflecting the accrued earnings.
- Redemption: Eligible, onboarded users can redeem their USDL for fiat currency at any time through Paxos International.
This model provides a passive income stream without requiring any active management from the holder. 👉 Explore more strategies for earning yield on stablecoins
Regulatory Framework and Eligibility
Paxos International operates under the oversight of the ADGM’s FSRA, known for its robust regulatory framework. This requires the company to:
- Maintain 100% reserve backing at all times.
- Hold only high-quality, liquid assets.
- Undergo regular audits and prudential supervision.
It is important to note that USDL is not available to residents of several jurisdictions, including the United States, the European Union, the United Kingdom, Canada, Hong Kong, Japan, Singapore, and the UAE (outside of ADGM). Always check eligibility requirements based on your location.
Frequently Asked Questions
What is a yield-bearing stablecoin?
A yield-bearing stablecoin is a type of cryptocurrency pegged to a stable asset like the U.S. dollar that also generates passive yield for its holders. Unlike traditional stablecoins, balances increase automatically over time without needing to be locked in a protocol.
How is the yield for USDL generated?
The yield is generated from the interest earned on the reserve assets that back USDL. These reserves consist of U.S. dollar deposits, short-duration U.S. Treasury bills, and other highly liquid cash equivalents. The yield is not generated through decentralized finance (DeFi) activities.
Is USDL available to users in the United States?
No, USDL is not available to residents of the United States. It is also unavailable in several other regions, including the EU, UK, Canada, and parts of Asia. The stablecoin is specifically designed for users in permitted international jurisdictions.
Can USDL be used on other blockchains besides Arbitrum?
At the time of its launch on Arbitrum, USDL was already available on other networks. Its multi-chain strategy is designed to make the stablecoin accessible across various ecosystems, offering users flexibility and choice.
How do I start earning yield with USDL?
To start earning yield, you simply need to acquire and hold USDL in a compatible non-custodial wallet. The yield is distributed automatically on a daily basis, and you will see your token balance grow over time without any further action required.
Is USDL a secure stablecoin?
USDL is issued by a regulated entity and is backed by real, auditable assets held in segregated accounts. Its regulatory oversight and requirement to maintain full reserves contribute to its security and reliability as a stablecoin. 👉 View real-time tools for tracking stablecoin reserves