According to CoinDesk, PayPal's stablecoin PYUSD has surpassed the $1 billion mark in market capitalization, as reported by CoinMarketCap. This achievement comes as the stablecoin, issued in collaboration with fintech company Paxos, more than doubled its supply since June.
Despite a general cooling in the broader crypto markets over the summer, PYUSD saw a significant increase in user activity. Monthly active wallet addresses rose to over 25,000 in July, up from 9,400 in May, according to Visa's stablecoin dashboard created with Alluvium. PayPal's entry into the stablecoin market was initially seen as a significant moment for the crypto industry, with expectations that PYUSD could compete with established stablecoins like Circle's USDC and Tether's USDT. However, initial growth on the Ethereum network was slow until PYUSD expanded to the Solana network at the end of May.
The token's supply on Solana grew from zero to $650 million in three months, surpassing its supply on Ethereum. Over the past month, PYUSD's supply on Solana increased by 171%, rapidly approaching Tether's USDT on the network, according to DefiLlama data. Tom Wan, a business development and strategy associate at digital asset investment firm 21.co, noted that yield incentives on decentralized finance (DeFi) protocols played a significant role in PYUSD's growth. Solana-based protocols such as Kamino, Drift, and Marginfi introduced boosted rewards for PYUSD deposits, offering double-digit annualized yields for token holders. Recently, crypto custody firm Anchorage Digital also introduced rewards for PYUSD deposits to institutions.
However, there are concerns about the sustainability of PYUSD's growth if these incentives are phased out. David Shuttleworth, a partner at research firm Anagram, expressed doubts about the long-term viability of these incentives, stating that they are not designed to be permanent. The goal is to increase PYUSD circulation and encourage user activity, particularly on the Solana ecosystem.
