USDG: price, network and mechanics.

USDG launched in 2024, backed by a consortium including Robinhood, Kraken, Galaxy Digital and other crypto and fintech firms, with Paxos as operational issuer. The goal is to build a dollar stablecoin whose distribution partners share in the returns.

That revenue model differs from market leaders like USDT and USDC, where interest on reserves stays fully with the issuer. With USDG, a portion of that interest income is paid out to partners who distribute and use the token, increasing the incentive to circulate USDG widely.

Paxos has experience with regulated stablecoin issuance through earlier products and applies the same structure of segregated custody and periodic reporting to USDG.

USDG is backed by cash and short-term US treasuries held with regulated custodians, and is in principle redeemable one to one for dollars by authorized parties.

Paxos publishes periodic reports on reserve composition, in line with the approach it uses for other stablecoin projects under oversight of the New York State Department of Financial Services and, for Singapore issuance, the Monetary Authority of Singapore.

The peg is maintained through arbitrage: as long as large parties can redeem and mint at par, the market price stays close to one dollar.

Because Paxos operates under regulation in multiple jurisdictions, USDG was designed with formal oversight in mind, which may ease broader acceptance on regulated platforms. Under MiCA, a separate license is still required to offer USDG as an e-money token in the EU.

The revenue-sharing model isn't directly relevant to holders themselves — the interest goes to distribution partners, not token holders — but it can affect adoption and liquidity, and thereby indirectly USDG's tradability.

The main risks resemble those of other reserve stablecoins: counterparty risk at reserve custodians, dependence on the accuracy of reporting, and the risk that regulation in one of the involved jurisdictions changes.