USDG Listing

Simple Summary

We propose the onboarding of USDG, a USD-backed stablecoin issued by Paxos, on Aave V3 Core Instance. This listing would initially enable users to deposit USDG to earn yield and borrow USDG as a stable asset. Collateral usage will be considered at a later date following review by Aave's Risk Management teams. TEMP CHECK has passed [TEMP CHECK] Onboard USDG to Aave V3 Core Instance as well as TEMP CHECK Snapshot.

Motivation

USDG is a regulated stablecoin backed 1:1 by cash and short-term U.S. Treasuries, designed with regulatory compliance and transparency as core principles.

As a trusted stablecoin from Paxos, a regulated financial institution with a strong track record, USDG has gained significant adoption across various platforms, demonstrating market confidence and growing utility.

Key differentiators:

1. Regulatory compliance: USDG is fully regulated and issued by Paxos, a New York State Department of Financial Services regulated entity.
2. Transparency: Regular attestations verify USDG's reserves are fully backed by cash and short-term U.S. Treasuries.
3. Paxos plans to roll out a public bug bounty program in Q1 2026 on a major bug bounty platform. This program will cover all Paxos tokens and our full platform (APIs, UIs, etc.). We will share more details as we get closer to launch.

Specification

USDG Overview:

• Ticker: USDG
• Fiat backed stablecoin
• Issuer: Paxos
• Backing assets: USD cash and short-term U.S treasuries.
• Audits: Multiple third-party audits
• USDG Listed on: Major centralized and decentralized exchanges.

Use Cases:

1. Deposits enabled for yield generation
2. Borrowing enabled as a low-volatility asset

Oracle/Pricing

Given the recent behavior observed on other smaller stablecoin oracles such as mUSD, we recommend pricing USDG on Aave V3 Ethereum with a hardcoded price of 1 USD. In the current environment, a market oracle can produce temporary deviations that are not aligned with the asset’s backing, These deviations would open the risk of opportunistic borrowing at artificially depressed oracle levels prior to a return to backing value. Hardcoding the price to 1 USD removes this path, preventing its abuse and minimizing the asset’s risk.

This change does not introduce material additional risk as USDG is to be configured on the Aave Core instance exclusively as a borrowable asset and cannot be used as collateral. The oracle affects only the notional at which liabilities are recorded, not the valuation of collateral or the solvency profile of the protocol. In normal conditions, the hardcoded price neutralizes oracle-driven opportunities for underpriced borrowing. In a genuine depeg scenario, it is conservative for the protocol: USDG liabilities remain booked at 1 USD while the asset can be sourced below par by liquidators and borrowers alike, improving liquidation economics and reducing the probability of bad debt.

• Price Oracle: fixed $1 USDG/USD: 0xF29b1e3b68Fd59DD0a413811fD5d0AbaE653216d

Additionally 0xac140648435d03f784879cd789130F22Ef588Fcd has been set as the emission admin for USDG and the corresponding aToken.

Disclosure

The current proposal has been powered by Skywards. ACI is not affiliated with Paxos and has not received compensation for the creation and review of this proposal.

References

• Implementation: AaveV3Ethereum
• Tests: AaveV3Ethereum
• Snapshot
• Discussion

Copyright

Copyright and related rights waived via CC0.