USDG stablecoin: a new regulated asset from Paxos
On its own, owning stablecoins provides its owners with few benefits beyond protection from significant fluctuations in cryptocurrency quotes.
But what if a stablecoin has the same properties as a stock? For example, it could generate income for holders of a stable token. Global Dollar is just such an asset.
What is the Global Dollar?
USDG, or Global Dollar, is a stablecoin pegged to the U.S. dollar, issued by the issuer Paxos Digital Singapore. Global Dollar is an asset regulated by the Monetary Authority of Singapore (MAS).
Paxos Digital Singapore is a subsidiary of Paxos, an issuer that has issued well-known stablecoins such as:
USDG appeared on the crypto market and was listed on centralized exchanges in early November 2024. The value of the Global Dollar is pegged to the U.S. dollar exchange rate at a 1:1 ratio, and the stablecoin itself is backed by reserves consisting of cash and cash equivalents.
USDG is part of the Global Dollar Network, a decentralized payment network created by Paxos in collaboration with well-known financial firms such as Robinhood, Galaxy Digital, Bullish, Anchorage Digital, Kraken, and Nuvei.
According to the developers, the network was created to "accelerate the adoption of stablecoins" into existing payment systems. The project team notes that a significant part of the existing stablecoins on the market does not meet the modern requirements of the financial market. This situation is what USDG is supposed to change.
About USDG token
Global Dollar is an ERC-20 token issued on the Ethereum network. It is managed via smart contracts and is suitable for decentralized applications such as DEX exchanges and credit protocols.
As of January 2025, the USDG token is unavailable on decentralized exchanges and can only be obtained on centralized platforms. Accordingly, Global Dollar is not yet utilized in the DeFi ecosystem. However, given the fact that the USDG stablecoin is only a few months old, it is likely that the situation may change shortly.
According to CoinMarketCap, 38 million USDG tokens were circulating on the market as of February 2025. Paxos provides monthly reports on Global Dollar stablecoin reserves, which can be found on the company's official website. Enrome LLP, an independent Singaporean auditing company, confirms USDG reserves.
USDG positives and negatives
The pros of using Global Dollar will be the same as most stablecoins:
- The ability to quickly convert Bitcoin and other cryptocurrencies into a more stable asset;
- Access to a large number of DeFi applications that utilize stablecoins;
- Fast and cheap transactions when making international transfers;
- Transparency: users can track issuance and check the status of USDG stablecoin reserves.
However, the stablecoin Global Dollar has another strong point that other stablecoins lack — the ability to generate revenue from the issuer. Paxos Digital Singapore distributes income from reserves to active users and investors of the Global Dollar ecosystem, who contribute to its development.
Regulation is another strength of the Global Dollar. Paxos must follow the regulator's regulations when providing services with USDG tokens, which means that investors in this stablecoin are legally protected.
On the other hand, Global Dollar is still limited in use, as it exists in a single ecosystem — Ethereum — as of January 2025. This means that with high network utilization and rising transaction costs, USDG holders will have no alternatives to making cheaper transactions with the stablecoin.
Due to its small capitalization, which is only $36.9 million as of January 2025, the Global Dollar stablecoin still faces a lot of volatility. For example, in December 2024, the USDG exchange rate collapsed to $0.61 but quickly recovered. And by mid-January 2025, the price of the stablecoin reached $1.31. In addition, back in November 2024, according to CoinMarketCap, the historical high (ATH) of the Global Dollar price was recorded at $1.60.
In terms of capitalization, Global Dollar is not yet among the top 20 stablecoins and lags behind the collapsed TerraClassicUSD (USTC), which has more than $59 million. Due to its small capitalization, Global Dollar's stablecoin has low liquidity, which can lead to significant fluctuations in the token's exchange rate in case of high trading activity.
Conclusion
In summary, it should be noted that the stablecoin is issued by the well-known issuer Paxos, which has already been successful and demonstrated its reliability in USDP and Paxos Gold projects. However, it is still significantly inferior to the leading stablecoins regarding market indicators, such as capitalization and liquidity. Paxos will likely invest its resources in the development of the Global Dollar as well. As a result, over time, the capitalization and liquidity of the Global Dollar stablecoin will increase, and its volatility will decrease.