While other major issuers negotiate private deals behind closed doors, Paxos is pioneering something different: transparent, on-chain rewards that institutional partners can actually build on. No regulated stablecoin has offered on-chain rewards like this before. 

Paxos just launched the Partner Rewards Engine, a new suite of capabilities designed to bring programmable rewards to Paxos issued stablecoins. The first feature, now in closed alpha, is Daily Rewards. In this post we'll share how we built it and why this design unlocks both regulatory compliance and technical innovation.

Why Claimable?

Claimable means institutional partners access rewards on their own schedule, not ours. That single decision shapes everything else about how the system works.

Transparency: Traditional stablecoin reward distribution lacked the transparency and auditability that regulated partners need. So we designed a claimable model: rewards accumulate transparently on-chain and institutional partners actively claim them. This creates clear, auditable distribution events that give institutional partners full visibility and control over timing and destination.

Programmability: The claimable model also turned out to be a powerful unlock. Because institutional partners claim rewards explicitly, they can then extend the model - supporting end-user reward programs independently of Paxos, routing to DeFi protocols, or batching claims for gas efficiency. Compliance, transparency, and programmability, all fit in one design.

Scale: Claimable rewards shift gas costs from the issuer to the moment of claim. Instead of Paxos executing thousands of daily transactions, institutional partners claim when they're ready, and as we detail in the next section, the math makes that cheap.

The Engineering: O(1) Rewards at Scale

The core challenge: "how do you support partner daily rewards across thousands of wallets without gas costs exploding?

Airdrops don't scale - gas fees can exceed the rewards themselves. Traditional rebasing updates every balance automatically, but that creates integration headaches for exchanges and custodians whose workflows and protocols often can’t handle balance changes without explicit transfer events.

Our solution borrows the mathematical elegance of rebasing while keeping balances stable and rewards explicit.

The Core Insight

Instead of tracking rewards per wallet, we track two things:

• Shares: each partner’s registered wallet's proportional claim on rewards.

• Multiplier: a global value that grows daily based on scheduled rates.

The relationship is simple:

rewards = shares × multiplier − balance

The multiplier grows daily based on a rate schedule that Paxos publishes on-chain. As it increases, every partner’s registered wallet's available rewards update instantly—no iteration required, no daily transactions needed.

Minimal Gas Overhead

Here's where it gets interesting. EVM balances are stored as uint256—256-bit integers. But real stablecoin balances to six decimals need at most 64 bits (enough for an 18 trillion dollar balance). That leaves 75% of each storage slot as unused high bits.

We packed shares and other metadata into that unused space. The result: no extra storage slots, no gas penalty. Transfers still cost under 75k gas in all scenarios—often the same as before we added rewards.

Rewards are drawn from a pre-funded claim source, not minted on claim. This keeps total supply as the true market cap, fully backed by USD.

What Institutional Partners Can Build

The claimable model opens up possibilities that non-claimable rewards can't offer:

Flexible timing: Claim daily, weekly, or batched—whatever fits your operations. institutional-partner rewards compound automatically while unclaimed.

Payout groups: Institutional partners managing thousands of wallets can organize them into groups (e.g., by entity, jurisdiction or use case). Claim for the entire group in one transaction, for the same gas cost as claiming for a single address. Set different destinations, delegate claiming authority, or distribute rewards off-chain.

Automation: Institutional partners can automate rewards programs, splitting rewards based on how they are generated in the institutional partner’s own rewards program, or directing them to liquidity pools, lending protocols or anywhere else.

Transparent tracking: Available rewards and rates are visible on-chain in real time via availableRewardsOf(address). No cross-company reconciliation, no black box.

This is what we mean by programmable rewards—not just transparent, but composable.

Alpha Launch: March 2

Daily rewards went live in alpha on March 2 for a small group of users. These are the first regulated stablecoins with transparent, programmable on-chain rewards. 

Access is currently limited to partners with early EVM use cases. Non-EVM support and broader availability are coming soon.

What's Next

Daily Rewards on USDG is the first time a regulated stablecoin has offered transparent, programmable rewards directly on-chain. But that's just one expression of the Partner Rewards Engine. We're bringing programmable rewards to all Paxos-issued stablecoins and white-label tokens, with non-EVM chain support on the way.

We're also building customizable enterprise reward logic, automated routing, and more. Programmable rewards are where stablecoins are headed, and Paxos is leading the way.