PayPal’s USD-pegged stablecoin, PayPal USD (PYUSD), is fast becoming a major player in the stablecoin department. This follows after it surpassed $1 billion in market capitalization, according to data from CoinMarketCap.
Since its 2023 launch, the PYUSD stablecoin has undoubtedly garnered wide attention in the digital currency space. It is backed 1:1 by US dollars and issued by US-regulated crypto custodian Paxos Trust Company.
Notably, PYUSD has serious competition from the likes of leading stablecoins such as Tether’s USDT and Circle’s USD Coin (USDC). However, it is designed in such a way that it offers a secure and reliable digital currency so as to give it a proper chance in the increasingly crowded digital asset market.
Furthermore, the stablecoin is also fully compatible with Ethereum as an ERC-20 token. So, this makes it the only stablecoin supported by PayPal’s payment rails.
“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar,” said Dan Schulman, PayPal’s president and CEO, in a statement last year. His words at the time now resonate more even as PYUSD continues to show its strategic role in the grand scheme of things, especially as it relates to digital finance.
Strategic Partnerships Drive PayPal’s PYUSD Adoption
For what it’s worth, the efforts of PayPal to ensure the broad adoption of PYUSD have not gone unnoticed. One such move was its collaboration with Anchorage Digital. Through the partnership, the company did launch a rewards program for clients who hold PYUSD through the crypto custodian. This idea is to incentivize users to engage more deeply with the stablecoin, thereby increasing its circulation and utility.
In May, PayPal further expanded PYUSD’s reach by launching it on the Solana blockchain. At the time, it saw support from several other big firms like Crypto.com, Phantom, and Paxos. PayPal believes that with this initiative, it can onboard more users onto Solana’s fast-growing blockchain network, offering them a seamless way to transact using PayPal USD.
The company has also teamed up with Web3 infrastructure provider MoonPay to enable cryptocurrency purchases using PayPal accounts.
Challenges Remain
Despite putting up an impressive growth this far, PYUSD still faces some serious issues. That is, in the area of commanding a tangible percentage of the stablecoin market. Leaders like Tether (USDT), for example, hold a market capitalization of nearly $118. USDC, on the other hand, holds $35 billion in market capitalization.
Although this reality persists, PayPal’s extensive user base and ongoing strategic partnerships may have carved out a niche for PYUSD in the competitive stablecoin market.
