Founded in September 2018, Paxos Standard (PAX) is a fiat-collateralized stablecoin backed by USD in accounts held by the company at the U.S. depository institutions.

Paxos Standard was created by Paxos, a New York-regulated financial institution. Led by CEO and Co-Founder Charles Cascarilla, the Paxos team consists of individuals from various backgrounds and experiences ranging from Wall Street to Silicon Valley. There is no fee for PAX conversion or transactions.

Announced publicly on September 10th, 2018, Paxos and Gemini are the first virtual currency companies to be granted Trust charter by the NYDFS (New York State Department of Financial Services). With the charter, Paxos can offer regulated services with crypto-assets and virtual commodities.

Paxos Standard was built to improve the larger financial ecosystem by creating a frictionless global network where digital assets can be mobilized with significantly increased speed, flexibility, and accessibility. It officially began trading on September 27th, 2018. Paxos’ goal is to create a future where digital assets, commodities, and securities can be transferred anywhere at any time.

PAX can be transacted over the Ethereum blockchain in the same manner as Ether or any other ERC-20 asset. If a user wishes to redeem PAX they can send tokens to an address controlled by Paxos who will destroy the tokens and transfer fiat currency to the user’s bank account. PAX’s existence on public blockchains allows traders and exchanges to use PAX as an alternative to fiat currencies allowing them to outsource their banking needs to Paxos. Pax’s existence as an ERC-20 token on Ethereum allows it to be integrated with Ethereum based applications.

Paxos Standard is fully collateralized 1:1 with USD in bank accounts, meaning that the total supply of Paxos (PAX) is backed by a fiat held in reserve by Paxos. The requests for purchase and redemption of PAX results in movement of cash in and out of the reserve, which in turn has the supplyController address mint and burn tokens accordingly. For example, purchase of $100 will result in issuance of 100 PAX tokens and $100 being deposited into the reserve. On the other hand, redemption of 100 PAX tokens results in destruction of those 100 tokens and withdrawal of $100 from the reserve to be given to the redeemer. As a resort to critical security threat, Paxos can pause transfer and approval of PAX tokens via OpenZeppelin’s contracts.

Although the creation and deletion of the tokens occur through Paxos, other transactions in PAX follow ERC-20 smart contracts. This ensures security for PAX, as it gets rid of the need for third parties and instead relies on the long-tested global blockchain network. Additionally, trading tokens is simple with PAX because viewing and transferring of PAX is automatically supported by most Ethereum-supporting exchanges and wallet applications.

Due to the Trust Charter, the New York State Department of Financial Services regulates and monitors the company and its operating procedures to make sure it follows New York banking laws. These banking laws also requires PAX to have the power to freeze accounts as well as wipe the balance of said frozen accounts. PAX has a function called “setLawEnforcementRole.” As its name implies, it can give administrative permissions over the circulating PAX supply. Paxos has assured that the function is for preventing illegal activities such as money laundering and terrorist financing and that it will not be used unless required by law.

Paxos Standard smart contract has been audited by Nomic Labs to ensure that the contract works as intended and advertised, and PAX ERC-20 contract code is available for technical reviews on Github. Moreover, Withum, a nationally ranked Top 25 auditing firm, confirms that dollar deposits match PAX tokens in circulation on a monthly basis for greater transparency.

Paxos is the sole entity capable of altering the circulating supply of PAX tokens. Paxos issue tokens when users deposit fiat currency into Paxos bank accounts while Paxos destroys tokens when users redeem tokens for fiat currency deposits in Paxos bank accounts. In order to prove that reserves exist and the system is solvent, PAX relies on a proof-of-reserves system whereby the system is fully collateralized when the number of PAX in circulation matches the value of the funds held in segregated accounts at FDIC-insured, U.S.-domiciled banks by Paxos. Paxos publishes monthly reports proving the US dollar reserves that back the PAX tokens in circulation.

Monthly Attestations