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PYUSD has jumped to become the sixth largest stablecoin. Why has its scale increased more than 2 times in the past three months?

BlockBeatsBlockBeats2024/08/22 13:00
By:BlockBeats

Looking back at the development in the past year, leveraging Solana and real money subsidies is undoubtedly a key turning point in the expansion of the PYUSD market.

Original title: "PayPal's PYUSD leaps to sixth place in stablecoins: Leveraging Solana and high APY, the scale has surged more than 2 times in the past three months"
Original author: Nancy, PANews


Backed by payment giant PayPal, the US dollar stablecoin PYUSD has grown into the sixth largest stablecoin after a strong start last year. Looking back on the development in the past year, leveraging Solana is undoubtedly a key turning point in the expansion of the PYUSD market, and the subsidies of real money and the expansion of application scenarios are making it more competitive.


Leaping to the sixth largest stablecoin, the market value and trading volume surged after expanding to Solana


PYUSD has shown a high expansion rate this year. According to DeFiLlama data, as of August 20, the total market value of the stablecoin market reached US$167.99 billion. Among them, PYUSD had a circulation of 230 million US dollars at the beginning of the year, accounting for less than 0.2% of the overall market. Now it has a market value of nearly 870 million US dollars and a market share of 0.5%, ranking sixth, surpassing stablecoins such as USDD, TUSD and FRAX.


Unlike stablecoins such as USDT, USDC and Dai, which are issued on dozens of blockchains, PYUSD is now only issued on Solana and Ethereum. According to DeFiLlama data, as of August 21, the circulation of PYUSD on Solana was 510 million, accounting for nearly 58.9%, while Ethereum was 350 million, accounting for 41.1%.



Although PYUSD's market share on these two blockchains is not much different, Solana's expansion was achieved at the end of May this year. PYUSD was originally planned to be issued on Solana in cooperation with FTX in 2022, and a relevant cooperation agreement was signed, but it was finally issued on Ethereum due to the collapse of FTX.


Prior to this, it took about ten months for PYUSD on Ethereum to reach a scale of less than US$300 million, but after being deployed on Solana, the market value surged by 217.9% in less than 3 months. And from the perspective of supply growth, the adoption rate of PYUSD on the Solana network is climbing at a relatively fast pace. On-chain data shows that in the past 30 days, the supply of PYUSD on Solana has increased by 131.8% to 510 million, while Ethereum has fallen by 2.4% to 350 million in the same period, indicating that the adoption rate of PYUSD on the Solana network is growing at a relatively fast pace.



PYUSD also occupies an important share in the Solana stablecoin market. According to DeFiLlama data, as of August 21, the scale of stablecoins on Solana reached 3.81 billion US dollars, and PYUSD ranked third among 26 stablecoin projects. But in the past month, the market value of PYUSD has increased by 132%, exceeding the first-ranked USDC (14.03%) and the second-ranked USDT (down 2.64%).



As the market value grew, the trading volume of PYUSD also increased significantly. According to data from blockchain data provider Allium Labs, PYUSD's trading volume in August was 4.94 billion US dollars, more than 15.4 times the $320 million at the beginning of the year. Especially since expanding to Solana, PYUSD has achieved a transaction volume of over US$9.84 billion in the past three months, which is 3.6 times the total transaction volume of the past (US$2.69 billion).


High APY income expands usage, and multiple measures increase popularity


The rapid expansion of the PYUSD market size is inseparable from the generous subsidies for cooperation with major DeF protocols on Solana and the popularization of payment scenarios.


In recent times, PYUSD has cooperated with many protocols such as Jupiter, ORCA, Wormhole, Drift Protocol, Kamino Finance and Marginfi. For example, when Jupiter launched PYUSD, the stablecoin can also be used in all payment integrations on the platform, including platforms such as Sphere Labs and Helio Pay; Kamino introduced PYUSD and officially launched a deposit incentive campaign, and increased PYUSD weekly incentives by 64% to 192,000.


At the same time, PYUSD on these DeFi protocols also provides high returns to incentivize users to use it. For example, there are 350 million PYUSD on Kamino with an APY return of 17.64%, Marginfi can provide PYUSD with an APY return of 18.58%, and the APY of PYUSD on Drift Protocol is 17.49-18.28%.


APY of PYUSD on Marginfi


The generally high yield of PYUSD is also believed to be related to PayFi, which is strongly promoted by the Solana Foundation. Payments and stablecoins are revealed to be the focus of Solana in the future. In sharp contrast, for example, the APY yield of PYUSD on Ethereum Aave is only 3.55%.


Not only that, compared with Ethereum, PayPal also introduced some new features to provide a better user experience when deploying PYUSD on Solana, including "confidential transfers" to provide consumers with confidentiality of transaction amounts while meeting regulatory requirements, transfer pegs that allow developers to call custom programs when using PYUSD for token transfers for individuals and merchants, and notes fields that allow users to record transaction information when making payments. And to further promote innovation and the adoption of PYUSD on Solana, PYUSD also recently announced a global hackathon for its stablecoin PYUSD, with a total prize of 40,000 PYUSD.


In addition to expanding application scenarios, PYUSD has also expanded its reputation by reducing fees, supporting cross-border transactions, and attracting developers to join, including the Web3 payment infrastructure Transak launching a fiat-to-cryptocurrency channel for PayPal USD to popularize digital asset payments; Bitcoin Pizza Festival temporarily waives fees for exchanging tokens such as BTC and ETH with PYUSD, and PayPal's cross-border remittance service Xoom provides PYUSD users with free remittance services to expand its international remittance market share.


In general, after laying the foundation with the help of Ethereum, which has a large user base and extremely high market consensus, PYUSD has made considerable progress by leveraging Solana's popularity and attractive income opportunities, and has gained a certain degree of market recognition, but it still has a long way to go to gain a greater voice in the stablecoin market.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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