When an industry giant like PayPal dives into the crypto market’s stablecoin realm, the expectation is that it would, in no time, sail to the top. It’s not just wishful thinking; it’s an anticipation built on the reputation of the company.
But to the surprise of many, PayPal’s much-vaunted stablecoin, Paxos-issued PYUSD, is failing to make waves in the digital financial waters.
The grand entrance it was supposed to make seems to have been muffled, leaving many to ask: why is PayPal’s might not translating into PYUSD adoption?
The declining stablecoin landscape
The stablecoin market, once a burgeoning space, has faced its fair share of turbulence lately. From a whopping $167 billion at the dawn of 2023, it has eroded to a current market cap of $124 billion.
While industry titans like USDC and USDT have seen millions flowing out daily, there’s been a simultaneous rise in centralized and decentralized alternatives attempting to plug the gap.
In this flux, PayPal’s PYUSD, unveiled with much fanfare on August 7, seemed poised to challenge Circle and Tether’s overwhelming dominance in the sector.
Fast forward three weeks, and the reality has been a cold splash of water. Critics have pointed to its centralized nature as a probable Achilles heel, preventing it from gaining momentum.
Numbers don’t lie: The stagnation of PYUSD
Let’s lay out the stats: According to Coinmarketcap, PYUSD has a circulating number of 47 million tokens. But, and it’s a big but, most of these tokens are playing the waiting game. As per DeFiLlama, they’re largely stagnant, gathering digital dust on centralized exchanges.
Further solidifying the bleak outlook, Nansen’s data spills out that a staggering 90% of the circulating supply is held by none other than Paxos, the very issuer of PYUSD.
The decentralized exchange pools featuring PYUSD? A measly 50,000 tokens. And the number of PYUSD holders in total? An underwhelming 233, according to Etherscan.
Meanwhile, the stablecoin universe has seen other entrants storming the scene with more notable success. GHO from the Aave lending protocol, for instance, raked in a market cap of $17.53 million just three weeks post its launch.
Similarly, crvUSD from Curve quickly crossed the $18 million mark post its inauguration. Now, Aave’s founder, Stani Kulechov, did offer a nugget of wisdom during a chat with Blockworks.
While surface-level metrics can be intriguing, the real magic lies in carving out tangible use-cases in the real world. In his words, while liquidity remains a pivotal base for any stablecoin, the thrill isn’t merely in minting and offering liquidity.
Decentralized finance has already cracked the supply code, so the real question that remains is – how to drum up demand and stimulate consumption?
It’s early days yet for PayPal’s foray into the stablecoin market. But the initial rumbles, or lack thereof, are causing raised eyebrows in the financial tech corridors.
While the company’s clout and reputation are undeniable, PYUSD’s progress or stagnation serves as a testament to the fact that in the ever-evolving crypto landscape, past accolades don’t guarantee future success.
