Today PayPal announced the availability of its PYUSD stablecoin on the Solana blockchain after launching on Ethereum last year. The announcement is unsurprising as Paxos Trust is the issuer of the stablecoin and it launched its own USDP stablecoin on Solana in January.
Given Paxos is regulated as a trust by the New York State Department of Financial Services (NYDFS), every new blockchain it uses requires regulator approval. In contrast, Circle’s USDC is issued under a different legal regime and hence doesn’t have the same restrictions.
Compared to Ethereum, Solana has far lower transaction fees, usually under three cents. Plus, it supports substantially more than 1,000 transactions per second (TPS) compared to Ethereum’s TPS of around 15. However, unlike Ethereum, Solana has had numerous outages.
With Ethereum’s high transaction fees, people don’t use it for everyday stablecoin payments. Currently, the PYUSD stablecoin capitalization is just under $400 million with Paxos holding more than 30%. Crypto exchanges Crypto.com and Bullish make up another 30% or so. And the top 17 wallets, including DeFi protocols hold 97% of the balance.
“PayPal USD was created with the intent to revolutionize commerce again by providing a fast, easy, and inexpensive payment method for the next evolution of the digital economy,” said Jose Fernandez da Ponte, SVP of the Blockchain, Cryptocurrency, and Digital Currency Group, PayPal. “Making PYUSD available on the Solana blockchain furthers our goal of enabling a digital currency with a stable value designed for commerce and payments.”
The Solana version of the stablecoin is available via PayPal, Venmo as well as Crypto.com, Phantom and Paxos.
While Paxos Trust currently handles the custody and issuance of the stablecoin, we reported yesterday that PayPal has now been awarded its own NYDFS trust charter. Hence, it may take the stablecoin issuance and custody in-house.
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