Stablecoins provide a smart usage of cryptocurrencies, excluding their frequent fluctuations, like how Bitcoin and Ethereum prices change. These coins use a pegging mechanism to remain stable and provide a reliable payment method.
Many cryptocurrencies and stablecoins emerged in the last decades, like USDT and USDC, and recently, the digital payment processor guru PayPal decided to join the trend by launching its own native stablecoin.
PYUSD is the new stablecoin in the market. How will it affect the stablecoins market, and what are its use cases? We will explore this and more in the following.
PayPal’s New PYUSD Token
PayPal commenced its initial ventures in the crypto space in 2020 by listing Bitcoin as a payment method for its US customers, allowing users to buy and sell using the most popular cryptocurrency. A couple of years later, Ethereum, Litecoin, and Bitcoin Cash joined the listing in PayPal payments.
PYUSD token was launched in August 2023 as an ERC-20 token and quickly became one of the major introductions of the crypto world.
The PYUSD token is pegged to USD in a 1:1 ratio and backed by short-term US treasuries and cash capital to maintain stability.
This introduction embodies PayPal’s intention to keep its leadership in global digital payment methods and, this time, by extending its offerings to crypto enthusiasts and web3 developers.
PayPal intends to power its stablecoin with contemporary use cases that benefit digital asset creators and personal and commercial entities who want to transact in cryptocurrencies.
How Will PYUSD Change the Stablecoin Market Dynamics?
The stablecoin market has witnessed several changes over the past two years, with the collapse of the TerraUSD and the overall meltdown of the crypto market. Therefore, it is crucial for the newly launched PYUSD to ensure robust safety and use a reliable pegging mechanism.
The sophisticated payment processing environment that PayPal built over decades is the backbone of its new PYUSD token, and the company is relying on its expertise in transactions and gateways to gain users’ trust.
This introduction puts PayPal’s new token in direct competition with USDT and USDC, two of the most commonly used stablecoins. So, let’s review these tokens’ performance in the market.
Tether – USDT
Tether is the 3rd cryptocurrency in terms of market capitalization, with more than $83 billion.
Despite its fixation to USD with 1:1 and not being used as a tradable instrument, USDT made it to the top three cryptos simply due to its usability and applications as a stable payment method powering different e-commerce platforms, web3 projects, online stores, and being listed on major exchanges.
This established stablecoin is more likely to rival PYUSD in the market, given that it has been on the market for nearly a decade now, and many crypto enthusiasts have adopted it as their main online payment option.
USD Coin – USDC
USD coin is another stable cryptocurrency that made its way among the top 10 cryptocurrencies and is now ranked #6 with a market cap of over $25 billion.
USDC was minted according to Ethereum’s ERC-20 token protocol and supports interoperability from different blockchain networks like Tron, Polygon, Avalanche, and more.
The same founding company also founded EUROC, Euro Coin, which boosted the USDC usability and adoption in different web3 projects and online platforms as a reliable and stable payment method.
With its PYUSD token, PayPal disrupts the stablecoin space and promises to power multiple exciting Web 3.0 projects. PayPal relies on its expertise to gain customers’ confidence, and with the reputation of a pioneer payment processor dealing with famous merchants, it seems PYUSD has an exciting journey ahead.