PayPal is one of the most popular digital transaction platforms in the world. So, when this giant platform announced its stablecoin pegged to the US dollar, people expected nothing but another big hit.
However, as per the data we are getting after a complete year of the token launch, PayPal USD has not made much impact on the market yet. However, the token is still making progress by offering faster and cheaper transactions through the Solana blockchain.
What do the current market trends say about the future of PayPal USD? Does the token have the potential to become one of the go-to stablecoins in the future, beating Tether and USDC? Will the coin be able to keep its peg with the USD in coming years? To find answers to these questions, and to know more about the future of PayPal USD, read on.
What is PayPal USD (PYUSD)?
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PayPal USD also called the PYUSD is a stablecoin that is pegged with the US dollar in a 1:1 ratio. Each PYUSD token in supply is backed by US dollar deposits, US treasuries, and similar cash equivalents. This means that digital currency can offer a stable exchange value at all times. Stablecoins are used to remove the inherent volatility that all cryptocurrencies have.
Paxos Trust Company is the issuer of PYUSD, and they are available on Ethereum and Solana blockchains. Users of PayPal can easily purchase 1 PYUSD in exchange for 1 USD from the platform. They are available for users from the United States.
According to independent sources, the coin has a robust regulatory framework, with the oversight of the New York State Department of Financial Services. Furthermore, the cash reserves of the coin are periodically audited by independent accounting firms, further ensuring transparency.
The coin was introduced in August of last year as another step of PayPal into the world of digital assets, in association with Paxos. The original aim of the developers was to offer a cryptocurrency that combines the convenience of making transactions through the PayPal platform, and the immutability and transparency of blockchain technology.
PayPal USD (PYUSD) Market Overview
According to historical data, PYUSD has always managed to maintain a stable value to the US dollar. At the time of writing this article, the coin is valued at $0.9999. Here is a market overview of PYUSD:
- Market Capitalization: $667.93M
- Trading Volume: $14.50M
- FDV: $667.93M
- Vol/Mkt Cap (24h): 2.24%
- Total Supply: 668.01M PYUSD
- Circulating Supply: 668.01M PYUSD
- Market Sentiments: 80% Bullish
PYUSD is the seventh-largest stablecoin by market capitalization, and the token seems to do fine if we are just looking at the data. However, the volume per market cap is only 2.24%, which means that the token has low liquidity. This is a direct reflection of the low adoption of the token.
Will PYUSD Maintain its USD Peg in the Future?
Stablecoins are great digital assets for transactions, they can hold the same value over time, unlike traditional cryptocurrencies. However, we have seen stablecoins losing their peg with the underlying asset beyond recovery.
One of the famous examples is of course the crash of terraUSD that occurred in May 2022. The crash was so fatal in the cryptocurrency market that completely wiped out about $20 billion overnight. So, investors should have transparency about the stablecoin they are investing in, to ensure safety.
In terms of PYUSD, it seems like the coin has sturdy security, and transparency indicates that the coin can hold its peg for the foreseeable future. The security is multifold and it includes regulatory oversight from the New York State Department of Financial Services, which ensures the coin follows stringent regulatory standards.
This ensures that the coin’s developers are maintaining cash reserves. Additionally, the blockchain employs a third-party accounting firm to audit the reserves. So, the coin will highly likely hold its beg for the long term.
Will PayPal USD Be the Go-TO Stablecoin?
While the goal of PYUSD is to become one of the frontrunners in the stablecoin market and be the go-to digital asset for blockchain transactions, it has a long way to go and multiple battles to win. The stablecoin market is currently dominated by USDT and USDC, with a very high market cap that is quite far from PYUSD.
It is safe to say that the PYUSD is well behind its competitors. The users have already become comfortable with other alternatives and on average they offer more liquidity than PYUSD. You can see this trend when comparing the trading volume of PYUSD with that of other stablecoins such as USDT and USDC.
However, the coin is making progress by making itself available on both Solana and Ethereum blockchain. It is also important to note that since PayPal USD is a yield-bearing cryptocurrency, it may become more popular when the platform can offer high yields of 5% or above.
Conclusion
PayPal USD (PYUSD) is a stablecoin created by PayPal and Paxos. The coin is pegged with the US dollar in a 1:1 ratio. It is available on PayPal, Ethereum, and Solana. It is developed to provide easy and convenient cryptocurrency transactions.
While the coin is showing promising performance in the market, it is overshadowed by giants like USDC and USDT. According to the data available at the moment, we cannot say with conviction that PYUSD can become a go-to stablecoin battling all its competitors.
