PayPal’s stablecoin PYUSD has plummeted, with its market value shrinking 40% since August, when it topped $1 billion.
By October 16th, PYUSD’s market cap was $618 million, reflecting a significant drop in just six weeks. It is currently well below its August high when it was ranked as the No. 4 stablecoin. Launched on the Ethereum network in August 2023, PYUSD initially gained momentum. By mid-August, Solana’s supply surpassed Ethereum’s, showing strong early adoption. A key driver of this growth was our partnership with Kamino Finance, a Solana-based lending platform. Mr. Jinno increased the appeal of PYUSD by offering interest rates as high as 17% with a portion of PayPal’s funds.
PYUSD market capitalization drops significantly
PYUSD’s market capitalization has fallen by more than 10% in the last week. Source: CoinGecko
In recent weeks, PYUSD yields have fallen sharply. Kamino Finance lowered yields on PYUSD deposits from around 17% to less than 7%, which impacted other Solana-based protocols such as Drift and Marginfi, which previously offered double-digit annualized returns. . This downgrade made PYUSD less attractive to investors and led to a significant drop in market capitalization.
Haseeb Qureshi, managing partner at Dragonfly Capital, noted that PYUSD’s circulating supply has returned to its original state as Kamino’s incentives have been reduced. His comments highlight how heavily the PYUSD market relies on such incentives for its performance.
Despite the economic downturn, there are signs that a recovery is possible. Kamino recently introduced PYUSD to its “altcoin market” where users can borrow against positions in meme coins such as WIF, POPCAT, and BONK. The initiative includes an additional weekly reward of $10,000 in PYUSD for depositors. On the other hand, the PYUSD lender on Aave, an Ethereum-based decentralized exchange, is more stable but has a lower return of around 4.3%.
While the market caps of stablecoins USDT and USDC have remained stable over the past six weeks, PYUSD’s Solana-based market cap has fallen from over $600 million in August to around $267 million. There are still $350 million worth of PYUSD tokens in circulation on Ethereum.
Despite this decline, PYUSD’s cross-chain market capitalization is still up 375% year over year, according to CoinGecko. This growth makes PYUSD the ninth-largest stablecoin by market capitalization, suggesting that despite short-term challenges, long-term growth prospects remain strong.
PayPal expands encryption services to US businesses
PayPal is expanding its digital asset services by allowing U.S. business customers to buy, sell, hold and transfer cryptocurrencies. The initiative aims to increase the use of cryptocurrencies among retailers, but will initially not be available for business accounts in New York state.
Since 2020, when PayPal first enabled users to own digital assets, the company has steadily expanded its services. Recently, PayPal launched PYUSD on both Ethereum and Solana. Now, this new service for U.S. businesses is stepping up efforts to incorporate cryptocurrencies into everyday financial activities.
PayPal continues to grow its digital assets sector through partnerships and new projects focused on expanding the use of PYUSD. PayPal also revealed plans for its U.S. business customers to use cryptocurrencies for transactions, highlighting the benefits of stablecoins for faster payments and smoother cash flow.
Even though PYUSD’s market value has declined recently, its year-over-year growth rate remains strong. PayPal’s focus on improving PYUSD’s capabilities through partnerships and service expansions could help stabilize and improve its performance in the market.
