Price collectors have devalued the Pax dollar
The decline of the Paxos dollar (USDP) stablecoin was not caused by the protocol itself, but by issues related to pricing, a Paxos spokesperson said.
According to CoinMarketCap data, the Pax dollar price peaked at $1.29 on April 16, before returning to $1 within three hours of the de-peg.
A spokesperson for Paxus told Cointelegraph:
“These platforms pull price data from trading venues. Yesterday, there were price spikes in certain venues that affected the USDP price at the aggregators. Paxos does not monitor markets or trading activity in other trading venues.”
The move comes amid a massive market cap for USDP, which has grown from a market cap of $140 million to a market capitalization of $181 million in a short period of time as the coin hit $1.29, according to CoinMarketCap.
USDP's market capitalization dropped to $140 million around the same time that parity with the US dollar returned. USDP currently sits at a market capitalization of $134 million.
Despite temporary price fluctuations, USDP will always remain redeemable at fair value through Paxos, the spokesperson said.
“Paxos always considers USDP as $1 and customers can always create and redeem USDP from Paxos for $1. Paxos offers APIs that provide 1:1 redemption 24/7. If venues choose not to implement these APIs or do not want to ensure that liquidity is supported, it is up to the user to decide the best approach to ordering.
Paxos USDP is currently the 13th largest stablecoin by market capitalization, according to CoinMarketCap data.
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The dealer spent $529,000
On April 17th (ex-Twitter), an unknown trader liquidated $529,000 worth of Circle's USDC shortly after the Pax Dollar Pax Dollar was posted by Chain's security firm PeckShield.
Traders working on different platforms should closely monitor the platform's order book to avoid similar risks. A spokesperson for Paxus told Cointelegraph:
“When trading anywhere, users should check the order book before placing large orders. Especially for stable coins, users should make sure to use limit orders.”
The Pax dollar has experienced significant price fluctuations more than once. USDP hit an all-time low of $0.87 on March 13, 2020, and peaked at $2.02 on November 16, 2021, according to CoinMarketCap.
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