A new cowboy in town. This Wild West of cryptocurrencies as some like to call it, yet attracts more and more activities. And this, even among the leaders of traditional finance. This new market is promising, so it would be foolish not to take advantage of it. In any case, this seems to be the ambition of PayPal which has just announced its new stablecoin, the PYUSD. A plan prepared a long time ago which suffered some setbacks. We explain everything to you in this article.
PayPal launches its own stablecoin on Ethereum
PayPal is far from a newcomer to the crypto ecosystem. The firm has long offered its users services for the purchase and custody of cryptocurrencies, including BTC And ETH. She would hold over a billion dollars in crypto on behalf of its customers. So it was obviously time to move up a gear.
In fact, PayPal has started developing its stablecoin project since 2021. It was initially supposed to be launched in partnership with FTX on the Solana blockchain. A bankruptcy later, PayPal fell back on the Ethereum blockchain and partnered with Paxos. The issuer of Paxos Gold also got into legal trouble over the DRY (Securities Exchange Commission) concerning BUSD, Binance’s stablecoin. This again had to delay the project. However, after months or even years of negotiations, it is now done, PayPal’s PYUSD is finally here.
However, the choice of the Ethereum blockchain asks questions. Indeed, despite its robustness, its usage costs are particularly high, as we know. This could prove ill-suited to a stablecoin whose goal remains to be used intensively by all PayPal users for their daily payments.
“The launch of PayPal’s stablecoin on Ethereum rather than one of its multiple layer 2 [couches secondaires moins coûteuses en frais de transaction] (…) is honestly a brilliant way to hide their exorbitant running costs behind blockchain gas fees. »
David Phelps
The choice of this blockchain is surely due to its longevity and its decentralization which protects it more than the others from severe sanctions from the armed arm of the US government, the SEC of Gary Gensler. The fact remains that the choice of this blockchain remains debatable from a practical point of view.
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PYUSD, a threat to USDT and USDC?
“PYUSD is the first of its kind, representing the next phase of the US dollar on the blockchain. (…) [C’est] the safest dollar-backed digital asset in the world. »
Paxos
Could PYUSD compete with the already entrenched industry behemoths USDT of Tether and the USDC of Circle ? Some point to its technical problems. PYUSD would run on a version of Solidity, Ethereum’s programming language, dating back to 2018.
According Paolo ArdoinoCTO at Tether, the USDT would be little threatened by this newcomer.
“Tether is primarily focused on emerging markets and developing countries. development [et non les US]. »
The leader even sees this as good news.
“Another stablecoin in the US could accelerate the erosion of payments revenue at Mastercard and Visa. It could also help the industry achieve more accommodating regulation. »
For the USDC whose market shares are more US-centric, the situation could be more complex. However, before PYUSD becomes a serious competitor, it still has a long way to go.
“I think the major short-term issue is whether or not PayPal’s stablecoin will be listed on major exchanges. »
Anders Helseth, vice-president of the firm K33, specialized in crypto research
PayPal, a payment services giant, represents 430 million active users. And the company chose the Ethereum blockchain to establish its stablecoin. Wouldn’t the important information behind these lines be this? Not just a new stablecoin from one more Fintech is born. But, every day, the Ethereum network imposes itself a little more as the foundation of this Internet of value. being born before our eyes.
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