- PayPal’s PYUSD stablecoin has reached a $1 billion market cap on Solana, with an impressive 271% increase since its launch.
- Solana was chosen for PYUSD due to its fast transactions, low fees, and advanced token features that enhance utility and compliance.
- Solana now holds 64% of PYUSD’s market share, driven by strong integration with DeFi, where 81% of PYUSD on Solana is utilized.
In a recent tweet thread, the Solana blockchain announced a significant milestone for PayPal’s PYUSD stablecoin, which has surpassed a $1 billion market capitalization. This impressive figure represents a 271% increase since PYUSD was launched on Solana, with Solana-based PYUSD contributing 88% of this growth.
The rapid rise of PYUSD raises the question: why did PayPal choose Solana for this expansion, and what factors are driving its adoption? PayPal has been a trailblazer in digital payments for over twenty years, always focusing on making transactions fast, affordable, and accessible globally.
With its long history of innovation in online payments, the company is now focusing on the next frontier: on-chain payments. On-chain payments offer several advantages over traditional systems, including faster transaction settlements, reduced costs, and enhanced programmability.
Launched in August 2023, PYUSD debuted on Ethereum. It is issued by Paxos and backed by high-quality liquid assets with a 1:1 redemption ratio in U.S. dollars. PayPal’s strategy for PYUSD involves three stages: raising awareness, providing utility, and achieving widespread adoption.
While the Ethereum launch effectively raised awareness, PayPal recognized that a more efficient blockchain was needed to fully realize PYUSD’s potential utility for consumers and merchants.
Why did PayPal Choose Solana?
Solana was chosen for its superior performance attributes, including near-instant settlement times, minimal transaction fees, and a robust ecosystem with over 2,500 developers. A key factor in the decision was Solana’s token extension features, which enhance the design space for token issuers.
These extensions, such as confidential transfers, transfer hooks, and memo fields, allow for greater compliance and utility without requiring extensive infrastructure or permissioned environments. PayPal emphasized that these features are crucial for PYUSD to expand its utility across various commercial segments.
Currently, Solana has become the primary platform for PYUSD, holding a 64% market share compared to Ethereum’s 36%. The growth of PYUSD has been fueled by incentives to integrate with DeFi protocols like KaminoFinance.
Notably, 81% of PYUSD on Solana is utilized in DeFi, according to Syndica_io. This extensive use is accompanied by remarkably low transaction costs, with median fees for PYUSD transfers averaging about a tenth of a cent, as reported by Artemis_xyz.
As PYUSD continues to build out its position on Solana, the stablecoin’s success hints at a greater role for tokenized assets and DeFi applications. The same can be said of the more diverse number of sophisticated token extensions that look upon Solana as exceptionally fertile ground upon which to grow ambitions-developers and institutions alike.
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