I’ve spoken with Spencer Applebaum from Multicoin Capital and I am in support of this proposal.
PAX is one of the most regulated stablecoin around being regulated by the New York State Department of Financial Services (“NYDFS”). This has the following benefits (taken from here):
- The value of each stablecoin token is tied directly to the value of the US dollar, and the amount of “reserve” dollars equal or exceed the number of stablecoins outstanding.
- Regulators are overseeing the establishment and maintenance of reserves backing the stablecoins.
- Reserves may only be held in the safest forms, such as FDIC-insured bank accounts and in short-term maturity US Treasury instruments.
- Reserves are fully segregated from corporate assets, specifically for the benefit of token holders, and are held bankruptcy remote pursuant to the New York Banking Law.
We compare the breakdowns of PAX vs. other stablecoins:
The underlying assets of PAX are much more liquid and stable compared to USDC and even more so than USDT.
I argue that the price of PAX will hold to a 1:1 ratio against the US dollar much better than USDC or USDT which are both listed on Compound for the reason of being strictly regulated by the NYDFS.
I’ve also gone ahead and looked into the smart contract code and its audits which all seem fine.
The first version of the PAX contract (upgradable contract) was audited 3 times and those audits can be found here: https://github.com/paxosglobal/paxos-gold-contract/tree/master/audit-reports/pax-audits.
Although the second (latest) version of the contract hasn’t been audited, the contract format is based on PAXG which has been audited twice: https://github.com/paxosglobal/paxos-gold-contract/tree/master/audit-reports/paxg-audits.
I’ve also asked about how the owner account of the contract is secured to which Spencer replied that it’s secured via a multisig contract: https://www.paxos.com/simple-multisig-how-it-works-and-why-its-awesome/.
All-in-all, PAX seems like a very strong stablecoin to add to Compound.