PayPal, the renowned online payment platform, has expanded its stablecoin, PYUSD, to the Solana blockchain, marking its first move beyond the Ethereum ecosystem.
This strategic decision aims to leverage Solana’s faster and cheaper transaction capabilities, particularly for retail payments and cross-border remittances.
TLDR
- PayPal is launching its PYUSD stablecoin on the Solana blockchain, nearly a year after its initial launch on Ethereum.
- The move aims to leverage Solana’s faster and cheaper transaction capabilities for retail payments and remittances.
- PYUSD on Solana will use Token Extensions, providing compliance and programmability features not available on Ethereum.
- Solana processes up to 65,000 transactions per second at costs as low as $0.0025, outpacing Ethereum’s 15 transactions per second with higher fees.
- PYUSD’s market cap is around $400 million, significantly smaller than stablecoin giants like Tether (USDT) and Circle’s USDC.
PYUSD was initially launched in August 2023, issued in collaboration with Paxos Trust Company on the Ethereum network as an ERC-20 token.
The stablecoin is backed by U.S. dollar deposits, short-term Treasurys, and cash equivalents, providing a stable value designed for commerce and payments.
According to Jose Fernandez da Ponte, Senior Vice President of Blockchain, Cryptocurrency, and Digital Currency Group at PayPal, the expansion to Solana “furthers our mission of enabling a digital currency with a stable value designed for commerce and payments.”
The move addresses the need for faster and more cost-effective transactions in the retail payment space, where high throughput and low fees are crucial.
Solana’s blockchain is capable of processing up to 65,000 transactions per second, with costs as low as $0.0025 per transaction.
In contrast, Ethereum currently handles around 15 transactions per second, and fees can range from $1 to $50 during times of high network congestion.
1/📣Breaking News: @PayPal USD (PYUSD) is live on Solana!
PayPal USD stablecoin issued by @Paxos will leverage Solana and token extensions to serve over 30m+ merchants, empowering users with fast and secure stablecoin transactions. pic.twitter.com/h66iejTv50
— Solana (@solana) May 29, 2024
This stark difference in transaction speed and cost makes Solana a more attractive option for small and daily purchases, where high fees could render transactions impractical.
PYUSD on Solana will leverage the blockchain’s “Token Extensions” standards, providing additional capabilities not available on Ethereum.
These extensions enable features such as enhanced privacy for merchant transfers and other compliance and programmability powers, catering to the specific needs of the payments industry.
While Ethereum has been the dominant blockchain for stablecoin issuance and usage, Solana has emerged as a strong competitor in recent times.
Data from analytics platform Artemis reveals that stablecoin transfer volume on Solana reached $1.5 trillion over the past year, surpassing Ethereum’s volume of $885 billion during the same period.
Solana’s growth has not been without challenges. The blockchain has faced recurring network outages, with the latest incident occurring on February 9, 2024, when transactions were down for nearly five hours.
To address these reliability issues, the Solana team is preparing to release an upgrade called “Firedancer” in the coming months, aiming to increase the network’s overall reliability and scalability.
Despite its name-brand backing, PYUSD has a relatively modest market capitalization of around $400 million, significantly smaller than industry giants like Tether (USDT) and Circle’s USDC.
Tether currently controls nearly 70% of the stablecoin market, with a market capitalization of approximately $111 billion, highlighting the dominance of established players in the space.
