TLDR:
- PayPal’s stablecoin PYUSD surpasses $1 billion market cap
- PYUSD launched in 2023, backed 1:1 by US dollars and issued by Paxos Trust Company
- Recently expanded to Solana blockchain, seeing rapid growth there
- Incentives and DeFi integrations have boosted adoption
- Still trails far behind market leaders USDT ($118B) and USDC ($35B)
PayPal’s stablecoin, PayPal USD (PYUSD), has surpassed $1 billion in total market capitalization.
Launched in 2023, PYUSD is a digital currency pegged 1:1 to the US dollar and issued by Paxos Trust Company, a regulated crypto custodian.
PYUSD is designed to bridge the gap between traditional and digital finance. As an ERC-20 token compatible with Ethereum, it’s integrated into PayPal’s payment systems, making it accessible to a wide network of developers, wallets, and Web3 applications.
The stablecoin’s growth has accelerated in recent months, more than doubling its supply since June. This surge coincides with PayPal’s expansion of PYUSD to the Solana blockchain in May, a move aimed at increasing accessibility and utility.
The Solana ecosystem has proven particularly fertile ground for PYUSD. In just three months, the token’s supply on Solana reached $650 million, surpassing its presence on Ethereum.
This rapid growth on Solana has put PYUSD in close competition with Tether’s USDT on the network.
Incentives have played a crucial role in driving PYUSD adoption. Several Solana-based decentralized finance (DeFi) protocols, including Kamino, Drift, and Marginfi, have introduced boosted rewards for PYUSD deposits, offering double-digit annualized yields for token holders.
Crypto custody firm Anchorage Digital recently launched a rewards program for institutional clients holding PYUSD.
Despite this growth, PYUSD still faces stiff competition in the stablecoin market. Tether’s USDT and Circle’s USDC remain the dominant players, with market capitalizations of approximately $118 billion and $35 billion, respectively.
PayPal has been actively working to expand PYUSD’s ecosystem. The company has partnered with Web3 infrastructure provider MoonPay to allow users to purchase cryptocurrencies using their PayPal accounts.
This partnership was later extended to enable on-ramping to the crypto betting platform Polymarket.
The stablecoin’s growth aligns with PayPal CEO Dan Schulman’s vision of digital currencies needing a stable, digitally native instrument easily connected to fiat currency.
As the only stablecoin integrated into PayPal’s payment systems, PYUSD is positioned to play a significant role in the company’s digital currency strategy.
Questions remain about the sustainability of PYUSD’s growth, particularly if current incentives are phased out. Some industry observers suggest that these incentives are designed to be temporary, aiming to boost circulation and encourage user activity in the Solana ecosystem.
As of August 2024, PYUSD’s monthly active wallet addresses have seen significant growth, increasing from 9,400 in May to over 25,000 in July, according to Visa’s stablecoin dashboard created with Alluvium.
