PayPal’s PYUSD Stablecoin Surpasses $1 Billion Market Cap Amidst Growing Adoption

PayPal’s PYUSD Stablecoin Crosses $1 Billion Market Cap

In a significant development for the cryptocurrency landscape, PayPal’s stablecoin, PYUSD, has surpassed the $1 billion mark in market capitalization as of last week, according to data from CoinMarketCap. This stablecoin, which is issued in partnership with the fintech company Paxos, has seen its supply more than double since June, marking a notable uptick in its market presence.

Despite a general cooling off in the broader cryptocurrency markets during the summer months, user engagement with PYUSD has experienced a remarkable surge. Monthly active wallet addresses reached over 25,000 in July, a substantial increase from just 9,400 in May, as highlighted in Visa’s stablecoin dashboard developed in collaboration with Alluvium.

PayPal’s entry into the stablecoin space was hailed as a “watershed” moment for the crypto industry last year, with many analysts predicting that PYUSD would eventually compete with established stablecoin leaders such as Circle’s USDC and Tether’s USDT. However, initial excitement began to wane as the token struggled to maintain momentum on the Ethereum (ETH) network. This changed with PYUSD’s expansion onto the Solana (SOL) network at the end of May, which has significantly influenced its growth trajectory.

Since its launch on Solana, the token’s supply has skyrocketed from zero to $650 million within just three months, now surpassing its supply on the Ethereum network. Recent data from DefiLlama indicates that in the last month alone, PYUSD’s supply on Solana has increased by an impressive 171%, positioning it to challenge Tether’s USDT dominance on that network.

According to Tom Wan, a business development and strategy associate at the digital asset investment firm 21.co, “Incentives play a huge role” in driving PYUSD’s recent growth. The integration of PYUSD with various decentralized finance (DeFi) protocols has also contributed significantly to its popularity. Notably, Solana-based platforms such as Kamino, Drift, and Marginfi have introduced enhanced rewards for PYUSD deposits, offering token holders attractive double-digit annualized yields. Furthermore, crypto custody firm Anchorage Digital has recently launched deposit rewards for institutions utilizing PYUSD.

Nevertheless, there are ongoing concerns regarding the sustainability of PYUSD’s growth once these incentives diminish. David Shuttleworth, a partner at research firm Anagram, expressed caution, stating, “My sense is that these incentives are not sustainable, but they are not designed to be permanent.” He further elaborated, “Part of the idea here is to circulate more PYUSD and engage users, particularly newcomers, in the active Solana ecosystem.”