We are proud to announce that Paxos, the leading financial market infrastructure and crypto brokerage platform, is now working with Chainlink to leverage its market-leading decentralized oracle network. This will boost the adoption of the USD-backed stablecoin Paxos Standard (PAX) and the gold-backed token PAX Gold (PAXG) within the Decentralized Finance (DeFi) ecosystem—a parallel financial system built on the blockchain which allows users to permissionlessly buy and sell financial products and assets without intermediaries.
The initial integration, which is now live in production, involves the launch of Chainlink-powered decentralized Price Feeds for both the PAX and PAXG tokens, providing DeFi smart contracts with a highly available, tamperproof, and accurate source of on-chain pricing data to reference when executing critical on-chain functions. Additionally, Chainlink will develop on-chain Proof of Reserve Data Feeds for Paxos assets, allowing DeFi applications to quickly verify on-chain that PAX tokens are fully backed 1:1 by US Dollars and PAXG tokens are fully backed by gold bars, both of which are held off-chain in Paxos’ custody.
By giving smart contract developers access to pre-built, easy-to-integrate, and proven Price Feed and Proof of Reserve oracle networks for both PAX and PAXG, it’s now easier than ever to support the secure and reliable use of these tokenized assets within DeFi applications. Most notably as a trusted form of collateral or payment, with users now receiving additional assurances that these tokenized assets are fully collateralized by real-world assets off-chain and priced at fair market values reflective of real-time conditions.
Using the Chainlink Network to Increase the Adoption of Paxos-Powered Assets in the DeFi Ecosystem
As one of the most widely used crypto brokerage and custody platforms, Paxos is focused on pushing the boundaries of financial innovation while maintaining full regulatory compliance for both institutions and end-users. To ensure clients like Paypal and Revolut remain at the cutting edge of financial innovation, Paxos constantly researches and develops better ways to accelerate the adoption of open financial systems, lower the cost for users, and increase the security of custudied funds. Being one of the fastest growing sectors of finance, DeFi presents an exciting opportunity for growth.
Paxos is established within DeFi through the successful launch of both PAX and PAXG, giving users on-chain access to tokenized assets fully backed by U.S. dollars and Gold in the custody of a highly regulated entity. Now it is critical to provision key infrastructure that supports the adoption of these assets within emerging DeFi protocols, particularly as a reliable form of collateral used in lending/borrowing and derivatives, as well as a tradeable asset and trusted form of payment.
Two key components to ensure PAX and PAXG are strong forms of payment and collateral includes providing assurances that these tokenized assets are fully collateralized themselves and that they are priced on-chain at their fair market value. This allows users to trust the assets will function properly within automated DeFi products, such as receiving the correct exchange rate on trades or ensuring a collateralized loan isn’t improperly liquidated.
Since price data is generated across a variety of centralized and decentralized exchanges, and custodial data exists completely outside blockchain ecosystems, a piece of middleware known as a blockchain oracle is required to connect DeFi applications to off-chain APIs for aggregated price feeds and bank reserve balances. Paxos is using Chainlink’s oracle solutions as they are highly secure, reliable, and flexible. Chainlink offers:
- High duality data sourced from premium APIs, leveraging modular Chainlink External Adapters that allow users to connect to any off-chain API.
- Security reviewed oracle nodes run by leading security and blockchain DevOps teams such as Deutsche Telekom subsidiary T-Systems, ensuring smart contracts always receive reliable oracle services.
- Decentralized infrastructure at both the data source and oracle node levels, providing developers with highly available and manipulation resistant data and oracle services.
- A proven mainnet solution already live in production and securing high-value contracts and assets, making it easy and safe for developers to quickly integrate Chainlink oracles into their applications.
- Blockchain agnostic oracle network, empowering the creation of oracle solutions on every blockchain where Paxos assets are supported both today and in the future.
Utilizing Chainlink’s infrastructure, the PAX and PAXG Price Feeds will provide smart contracts with on-chain price data backed by a decentralized network of security reviewed oracle nodes and sourced from off-chain data aggregators that maintain volume-adjusted market coverage across all trading environments. These Price Feeds can be integrated in under a day, and are resistant to various data manipulation vulnerabilities such as the recent flash loan exploits. Additionally, upcoming Proof of Reserve data feeds will give users more ways to verify that PAX and PAXG are fully backed by their respective real world assets.
The creation of these oracle networks give smart contract developers access to all the external data resources required to create highly secure financial applications backed by transparent forms of tokenized collateral. This allows Paxos to play a more direct role in supporting the growth of DeFi by bridging real-world assets on-chain while retaining the guarantees users expect when it comes to security, reliability, and transparency.
“Chainlink oracles will accelerate the adoption of Paxos’ USD and Gold-backed tokens in DeFi,” stated Walter Hessert, Head of Strategy at Paxos. “With the proof of reserve and price available on-chain, our regulated assets will become more accessible for DeFi users.”
Chainlink is the most widely used and secure way to power universal smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a fairer model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems, among others.
Chainlink is trusted by hundreds of organizations to deliver definitive truth via secure, reliable data feeds. To learn more, visit chain.link, subscribe to the Chainlink newsletter, and follow @chainlink on Twitter.
Paxos is a New York-regulated financial institution on a mission to create a global, frictionless and open economy. By building infrastructure to enable movement between physical and digital assets, Paxos is creating a future where all assets—from money to commodities to securities—are digitized and can move instantaneously, 24/7.
Today, as the first regulated Trust company for digital assets, Paxos technology makes it possible to tokenize, custody, trade and settle assets. It offers crypto solutions for enterprises, crypto trading, and settlement solutions for securities and commodities. Paxos clients include PayPal, Credit Suisse, Societe Generale, StoneX, Revolut and many more enterprises. With offices in New York, London and Singapore, Paxos takes a global view of modernizing the financial system. Learn more at www.paxos.com.