DeFi promises global access, 24/7 liquidity, and transparent execution. For regulated financial institutions, however, in order to leverage DeFi they must meet various regulatory, business, and legal requirements such as anti-money laundering (AML), countering the financing of terrorism (CFT), jurisdictional restrictions, and investor verification. These mandates, among others, have historically limited regulated institutions, restricting participation in on-chain finance to siloed and permissioned environments.

Our integration with Predicate changes this paradigm. Paxos International and Predicate have built a system in which institutional risk management requirements and public blockchains are no longer mutually exclusive. This enables Paxos International to support accessibility to their yield-bearing fiat-referenced token, USDL, in DeFi with robust pre-transaction controls embedded at the smart contract level. A USDL pool will soon be live on Uniswap V4 leveraging the Predicate Hook.

About Paxos International and Lift Dollar

Paxos is a globally regulated financial technology firm developing modern digital asset infrastructure. One of its affiliates, Paxos International, issues the yield-bearing, fully redeemable fiat-referenced token, Lift Dollar (USDL), under the regulatory oversight of the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market.

USDL generates yield from short-term U.S. government securities and distributes it daily on-chain via a rebasing mechanism. This design offers a powerful savings tool, particularly in emerging markets where inflation and capital controls can limit access to safe financial products.

Deploying USDL on Uniswap requires more than a simple integration. To meet regulatory requirements, Paxos International needs enforceable rules for AML, CFT, and geolocation, alongside infrastructure to support USDL’s rebasing mechanics. To address this gap, Paxos International and Predicate collaboratively developed a tailored solution, utilizing on-chain policy enforcement to ensure every transaction maintains Paxos International’s standards.

Policy as Critical Infrastructure: How Predicate Enables Programmable On-chain Risk Management

Predicate enables financial institutions to define policies, a set of programmable rules that include AML screening, geolocation restrictions, and identity verification, and enforce them before a transaction executes. These policies are enforced on-chain via a distributed network of operators, who validate conditional statements and issue cryptographic attestations. If the transaction does not meet the requirements set by the issuer, it never reaches the blockchain.

Unlike traditional risk management systems, Predicate policies do not stop at the application level. Policy enforcement happens at the protocol layer itself, using programmable logic, offchain data integrations, and cryptographic enforcement. This turns what used to be offchain "soft" controls into composable, trust-minimized smart contract-level infrastructure. For regulated institutions, this means their business, legal, and regulatory requirements become programmable code: auditable, enforceable, and compatible with the composable architecture of DeFi.

All of this makes Predicate the most robust form of blockchain risk management today.

The Institutional Hook System Behind USDL

Uniswap V4 is a decentralized exchange (DEX) protocol that enables custom logic at key transaction points through a feature called hooks, making it possible to embed policies directly into the mechanics of a liquidity pool. To support USDL’s deployment on Uniswap, Paxos International and Predicate developed the Predicate Institutional Hook. This hook enforces AML/CFT and geolocation policies before any swap executes. This ensures every trade meets Paxos International’s regulatory obligations without fundamentally changing the user experience. Through Predicate, various offchain data is utilized to meet Paxos International’s requirements.

Additionally, an Auto-Wrapping Hook is utilized to support USDL on Uniswap. This is because Uniswap v4 does not natively support rebasing tokens like USDL. The Auto-Wrapping Hook automatically wraps USDL into a non-rebasing form (wUSDL) when it enters the pool, and unwraps it when it exits. From the user’s perspective, it’s a seamless USDC↔USDL experience. 

Together, these hooks allow USDL to operate on a permissionless DEX while maintaining Paxos International's rigorous transaction requirements. 

To learn more, read the whitepaper here, written in collaboration by Paxos’ Kyle Libra, Lesley Chavkin, Predicate’s Anmol Arora, Hunter DeCristo, Nikhil Raghuveera, Jesse Sawa and Khushi Wadhwa.

A Shared Vision for Building the Regulated Rails for Onchain Finance

Our work with Predicate demonstrates that on-chain financial products operating in regulated markets can thrive without compromising on risk management or user experience. Paxos International and Predicate have built the programmable and regulated rails making it possible for institutions to confidently deploy assets via DeFi infrastructure.

We believe this is just the beginning. For DeFi to serve effectively as next-generation financial infrastructure, programmable policy enforcement must become the standard. With this implementation, the regulated rails are set for a new era of global finance built on blockchain technology.

NOTE: This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America (including its territories and possessions, any state of the US and the District of Columbia). This announcement is not an offer of securities for sale in the US. The digital assets referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended and may not be offered or sold in the US, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the US. USDL is not available to residents of certain jurisdictions, including the United States, and the United Arab Emirates except ADGM, the United Kingdom, the European Union, Canada, Hong Kong, Japan or Singapore.

About Paxos

Paxos is the leading regulated blockchain infrastructure and tokenization platform. Its products are the foundation for a new, open financial system that can operate faster and more efficiently. Today, trillions of dollars are locked in inefficient, outdated financial plumbing that is inaccessible to millions of people. Paxos is replatforming the financial system to enable assets to instantaneously move anywhere in the world, at any time, in a trustworthy way.

Twitter | Website

About Predicate

Predicate is a network for building pre-transaction policies. Through Predicate, developers and organizations define rules for on-chain interactions, integrating expressive pre-transaction logic into decentralized applications. These rules, like legos, can be stacked to form policies, which are enforced by the Predicate Network.

Twitter | Website