Author: Bubble
Editor: Frank
1. PYUSD becomes the sixth largest stablecoin in the world
The market value of PYUSD, a US dollar stablecoin issued by global payment giant Paypal, has exceeded the $1 billion mark.
At the beginning of 2024, the market value of PYUSD was only 234 million US dollars, but on August 27, the market value exceeded the 1 billion US dollar mark. In just over 7 months, the market value of PYUSD increased by 327%, which is a very rapid growth rate.
What does a volume of 1 billion US dollars mean in the stablecoin market?
According to data from the defillama platform, in the stablecoin market value ranking, PYUSD ranks sixth after stablecoins such as USDE and FDUSD.
Based on the recent growth rate, it is not impossible for PYUSD to rank among the top three stablecoins by market value by the end of this year.
2. PYUSD ’s growth comes from real money subsidies
Judging from the growth trend data of PYUSD, its market value growth mainly comes from the last two months. What factors have caused the surge in PYUSD's market value in the last two months?
From a time point of view, the past two months are also the time point when PYUSD on the Solana chain has grown rapidly from issuance.
The reason why the market value of PYUSD has grown so fast is mainly due to the high incentive strategy that PYUSD recently launched on the Solana public chain. That is, the rapid growth of PYUSD comes from real money subsidies and the expansion of application scenarios.
For example, the annualized yield (APY) of PYUSD in the Solana ecosystem staking project Kamino can currently reach more than 10%.
On the marginfi platform, the annualized staking yield (APY) of PYUSD also exceeds 10%.
If estimated based on the current on-chain TVL and APY of PYUSD, PYUSD needs to pay users up to several million dollars in interest every month due to incentive activities.
And who pays this huge interest?
Some people think that it is of course the Solana Foundation, because for the development of the SOL public chain ecosystem, they can try their best to issue PYUSD on the Solana public chain, but this is not the case.
The relevant person in charge of the Solana Foundation and Kyle, the managing partner of Multicoin, both made it clear that the Solana Foundation did not pay any incentive money, so the interest expenses of this PYUSD incentive activity certainly came from Paypal, the issuer of PYUSD.
Such high APY returns also allowed PYUSD on the Solana public chain to surpass the Ethereum public chain in mid-August, becoming the largest public chain issuance platform for the PYUSD stablecoin.
3. Reasons why PYUSD chooses Solana public chain
Currently, PYUSD is only issued on Ethereum and Solana public chains. PYUSD began to be issued on Ethereum in August last year and on Solana public chain on May 31 this year. Although the Solana public chain is 9 months late, the Solana version of PYUSD currently accounts for 63.61%, nearly twice the market share of the Ethereum version of PYUSD.
The reason why PYUSD chose Solana as the main public chain issuance platform is mainly related to the advantages of the Solana public chain. For example, the gas fee of the Solana public chain is very low, and the transaction confirmation speed is much faster than the Ethereum public chain. In addition, the Solana public chain also provides many extended functions suitable for today's Web2 business environment.
For example, compared with the Ethereum public chain, Paypal also introduced some new features to provide a better user experience when deploying PYUSD on Solana.
Such features include confidential transfers (merchants can choose the confidentiality of transaction amounts), transfer hooks (similar to plug-ins), and notes fields (users can note transaction information when paying).
These functions not only serve as icing on the cake, but are also more in line with the payment scenarios in the current business environment, which is conducive to promoting the large-scale commercial application of PYUSD.
In fact, the stablecoin PYUSD and the Solana public chain have a close relationship.
According to Wu Blockchain, PayPal had been preparing to cooperate with FTX in 2022 to issue PYUSD on Solana first. The two parties had already signed a relevant cooperation agreement, but then suspended it due to the collapse of FTX.
4. The strategic significance of Paypal ’s issuance of stablecoins
With the continuous development of blockchain technology and the advancement of global compliance of cryptocurrencies, Web3 payment will be a major trend in the future. It will bring people closer to realizing their payment desires: fast, cheap, and global payments. This will be a new generation of financial/payment infrastructure. Payment platforms can use stablecoin payment functions to allow everyone to pay as they wish.
Moreover, in the cryptocurrency ecosystem, issuing stablecoins is a highly profitable business, with profits far higher than most cryptocurrency trading platforms. The profits earned by Tether, the issuer of the USDT stablecoin, from issuing USDT in a year have exceeded the profits of many technology giants. Therefore, more and more financial giants have begun to deploy crypto stablecoins, and Paypal is one of them.
As a global payment giant, Paypal already has a large market share in the Web2 payment field. Paypal issued PYUSD not only out of consideration of the huge profits that stablecoins can bring, but more importantly, it is a strategic layout. As a payment giant, Paypal must not only continue to expand its market share in the Web2 payment field, but also expand its influence in the Web3 payment field in the future. In the Web3 payment field, Paypal has currently taken the lead.
Unlike stablecoin issuers such as Tether, Paypal is already a huge business empire in the Web2 world, with 400 million users worldwide. PayPal currently supports 200 countries and 25 currencies around the world and has a wide range of business application scenarios.
Paypal can use its resource advantages to quickly expand the application scenarios of stable currency PYUSD, such as e-commerce payment, etc.
It has a huge driving force for Paypal to seize the Web3 payment market. Moreover, the widespread use of PYUSD stablecoin can also promote the large-scale application of blockchain technology.
Currently, PYUSD is only issued on the Ethereum and Solana public chains, and will be issued on more public chains in the future.
Blockchain technology has been around for more than a decade, and cryptocurrency payments have reached a critical moment in history, just like the Internet in 2000, full of potential and opportunities.
As a global payment giant, Paypal has brought payments to the Internet, and now it wants to bring payments to the chain, thus leading payments into a new era of blockchain.
