PayPal's stablecoin, PYUSD, has achieved a significant milestone, surpassing a $1 billion market capitalization last week, according to CoinMarketCap data. Issued in partnership with fintech firm Paxos, PYUSD has seen its market presence expand significantly, more than doubling its supply since June.
Despite a general cooling of the crypto markets over the summer, PYUSD's user activity has surged. Monthly active wallet addresses exceeded 25,000 in July, a notable increase from 9,400 in May, as reported by Visa's stablecoin dashboard developed with Alluvium. This uptick in activity highlights the growing adoption of PYUSD in the stablecoin sector.
PayPal's entry into the stablecoin space was initially seen as a pivotal moment for the industry, with expectations that PYUSD could rival established players like Circle’s USDC and Tether’s USDT. However, early enthusiasm waned as the token's growth stagnated on the Ethereum network. The situation changed with PYUSD's expansion to the Solana network at the end of May, which significantly boosted its supply.
In just three months, PYUSD's supply on Solana surged to $650 million, surpassing its Ethereum-based supply. Data from DefiLlama reveals that PYUSD's Solana supply has grown by 171% over the past month and is rapidly approaching Tether’s USDT supply on the same network.
Tom Wan, a business development and strategy associate at 21.co, attributes PYUSD's recent growth to incentives and integrations with decentralized finance (DeFi) protocols. Solana-based platforms such as Kamino, Drift, and Marginfi have introduced enhanced rewards for PYUSD deposits, offering double-digit annualized yields. Additionally, Anchorage Digital recently began offering rewards for PYUSD deposits to institutional clients.
Despite the growth, concerns about the sustainability of PYUSD's expansion persist. David Shuttleworth, a partner at Anagram, expressed doubts about the long-term viability of the incentives driving PYUSD's current growth. He noted that while these incentives are not intended to be permanent, they are designed to increase PYUSD circulation and attract new users to the Solana ecosystem.
As PYUSD continues to gain traction and expand its presence on Solana, its future development will be closely watched by industry observers and participants. The token's performance will be a key indicator of how stablecoins can evolve and compete in a rapidly changing market.
August 2024, Cryptoniteuae