PayPal’s stablecoin sees slow uptake in first 3 weeks

Despite being backed by payments juggernaut PayPal and enjoying a scheduled listing today on Coinbase, the Paxos-issued stablecoin PYUSD seems to be struggling to gain on-chain adoption. 

As the total stablecoin supply has dwindled, and industry giants USDC and USDT average millions in outflows daily, a host of centralized and decentralized alternatives have risen to fill the void. Total stablecoin market capitalization is down to $124 billion compared to $167 billion at the start of 2023. 

PayPal’s PYUSD, which was announced on Aug. 7, initially appeared to be a possible contender to Circle and Tether’s 85% industry dominance. However, after three weeks the young stablecoin, which industry participants have criticized for its centralization, has struggled to gain traction. 

According to Coinmarketcap, PYUSD currently has 47 million tokens in existence. However, per DeFiLlama, the overwhelming majority have never circulated – a sign that minters are primarily sitting pat on centralized exchanges. 

Indeed, data from Nansen indicates that Paxos, the issuer of PYUSD, holds 90% of the circulating supply. While there are two decentralized exchange pools with PYUSD, they hold less than 50,000 tokens between them. 

Per Etherscan, there are merely 233 PYUSD holders total. 

In contrast, a pair of decentralized stablecoins that have launched in the past year saw significantly faster adoption. The Aave lending protocol launched GHO, which achieved a market cap of $17.53 million within its initial three weeks. Meanwhile, crvUSD from Curve surpassed $18 million shortly after its debut.

In an interview with Blockworks, Aave founder Stani Kulechov cautioned against looking too deeply into surface-level adoption metrics, however, indicating that finding real-world use cases may be more important. 

“Obviously having TVL [total value locked] and liquidity is an important base for every stablecoin out there, but it’s not exciting if all you can do is mint and provide liquidity,” he said.  “DeFi have solved the supply side – how do you generate demand? How do you provide consumption is the more interesting problem.”

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