A brief history
Paxos, formerly iBit, was founded back in 2012 by partners Charles Cascarilla and Rich Teo, with two headquarters, in New York and Singapore. Paxos was established in the light of the infamous Tether controversy, where the leading market stablecoin came under scrutiny for printing Tethers out of thin air during the early 2018 crypto market bull run. The Paxos team noticed this opportunity and made an extra effort to make their coin as transparent as possible. Paxos issues and burns its tokens using an audited smart contract. The Paxos company has a charter from the New York State Department of Financial Services that allows them to offer regulated services within the crypto asset world. The token itself is backed by the USD in accounts that are held by the company at the U.S. depository institutions. Additionally, Withum, one of the top U.S. auditing companies, regularly verifies the reserves.

USDP in practice
USDP can only be created when new US dollars enter the Paxos system. One new USDP token is minted when a person sends one US dollar to Paxos, which eventually goes to a Paxos-regulated bank account. When that person wants their dollar back, they must exchange it for one USDP and that USDP is then removed from the overall supply. This very simple system means that there will always be one US dollar for every one USDP in circulation. No USDP are pre-minted or created before they are bought so the total supply of PAX is completely based on demand for the token.