Paxos is partnering with Chainlink in an effort to make its asset-backed tokens more widely available in the decentralized finance (DeFi) market.
Paxos' move that pushes DeFi
Paxos standard (PAX) and paxos gold (PAXG) tokens are now available on Chainlink's Oracle network, according to a post shared on Twitter. According to DeBank, Chainlink serves as the background pricing and data infrastructure for many DeFi projects and accounts for more than 50% of on-chain smart contract calls among oracles.
In the DeFi industry, an oracle represents an intermediary between real-world data, such as prices or movements in financial products, and a public blockchain such as Ethereum.
This helps establish the terms of a smart contract and decide which direction to move the funds in. Paxos' stablecoin tokens mostly played the catch after the DeFi spike in 2020.
Of the leading DeFi lending platforms, according to DeFi Pulse, only MakerDAO currently offers PAX as a collateral asset. Additionally, stablecoins dai, usd coin (USDC) and tether (USDT) make up the lion's share of stablecoin activity on the Ethereum blockchain (where DeFi apps tend to develop the most), according to data provider DeBank.
Adding Paxos tokens to Chainlink feeds necessarily makes it easier to integrate new resources for any DeFi application that relies on the data provider. This also adds validity to the growing trend of real world assets making their way to the $ 21 billion DeFi market.
DeFi Regulated Guarantee
Paxos is using its high reputation to attract investors to its stablecoins. Each Paxos product is backed by a number of private and public entities attesting to actual reserves, business strategy chief Walter Hessert said in an interview.
The New York-based company - which recently partnered with PayPal (PayPal shares - ticker PYPL) to obtain different cryptocurrencies in relation to the new services of the company - holds a card of the New York Trust.
This means that any crypto product additions are scrutinized by the regulator, Hessert said. Paxos' bank accounts are also checked monthly by New Jersey-based accounting firm Withum. These results are sent to the Paxos API feed, which is then further routed to projects using Paxos tokens as collateral.
“The Chainlink oracles will accelerate the adoption of the USD Paxos and gold-backed tokens in DeFi,” Hessert said in a statement. "With proof of reserve and pricing available on-chain, our regulated assets will become more accessible to DeFi users."
