PayPal’s PYUSD Emerges as a Serious Player in Stablecoin Space

Leading stablecoins such as USDT and USDC are solidifying their presence in the market, consistently increasing their dominance and market share.

Yet, a new player is making headlines – PayPal’s PYUSD. While it remains comparatively smaller, this new stablecoin is quickly gaining traction, indicating a possible market shift according to recent analyses.

Could There Be a Shift in Stablecoin Power?

As detailed in a report from Hashdex’s research team, the market dominance of stablecoins increased by 3% in the third quarter of 2024. The dominant fiat-backed stablecoins, USDT and USDC, saw their market shares rise by 1% and 5%, respectively.

Conversely, PayPal’s PYUSD, while still not as large as USDT and USDC, recorded an impressive 57% surge in dominance during this same timeframe.

Last August, PayPal became the pioneering financial technology firm to introduce a US dollar-backed stablecoin. PYUSD, issued by Paxos Trust Company, is entirely backed by US dollar reserves, including Treasury securities and cash equivalents. It is available for trading on both PayPal and Venmo and has a stable 1:1 exchange rate with the USD.

In just 383 days post-launch, PYUSD achieved a market cap of over $1 billion, reaching this landmark nearly twice as quickly as USDC and thrice as fast as USDT, which are the leading fiat-backed stablecoins. Following its successful 2023 launch on Ethereum, PayPal’s stablecoin extended its reach to Solana earlier this year.

According to HashDex Research, the potential for institutional adoption of this stablecoin has positively influenced its outlook for the fourth quarter of 2024 and into the upcoming year.

“PYUSD is gaining momentum and may continue to seize more market share as its distribution grows.”

Rising Interest in Stablecoins Within Fintech

Stablecoins are increasingly becoming significant in the fintech landscape. Reports indicate that UK-based Revolut is advancing in the development of its own stablecoin.

Additionally, blockchain company Ripple announced plans to introduce a dollar-backed stablecoin, RLUSD, this spring, which will be backed by US dollar deposits, short-term Treasuries, and similar financial instruments.

Financial institutions such as J.P. Morgan are also venturing into the transaction settlement space, having created JPM Coin to facilitate real-time payments for their institutional customers.