The crypto community welcomed the news that PayPal, the $70 billion payments company, was launching an Ethereum-based stablecoin and predicted that the company’s brand and large user base would be a boon to the crypto markets.
Three weeks later, PYUSD spikes daily trading volume to less than $10,000, and data from Nansen shows that only a handful of wallets hold the token worth more than a thousand dollars.
DeFi users in particular are avoiding PayPal’s stablecoin, with the largest non-exchange wallet holding $500,006 of PYUSD, followed by just $9,861 and $8,500. Only PYUSD 39,750 is held in the Uniswap liquidity pools.
“Right now, very few people use and keep PYUSD in their self-managed wallets,” Nansen said. “On the surface, there is a lack of demand for PYUSD among crypto users when there are other alternatives.”
Paxos, the issuer of PYUSD, holds 89% of the outstanding supply, followed by centralized exchanges Kraken and Coinbase with 6.6% and 2.6%, respectively. Only 10 wallets currently contain more than 3,000 PYUSD tokens.
PayPal’s stablecoin is seeing minimal activity three weeks after launch
On Aug. 7, PayPal announced that US users with a PayPal balance account will be able to buy, spend, and trade PYUSD “in the coming weeks,” meaning that poor acceptance of PYUSD is not due to users not accessing it can.
Tether dominance rises
Still, PayPal may not be put off by DeFi locals’ indifference to PYUSD.
According to an Aug. 29 report by Binance, centralized tokens account for 92% of the $124.4 billion in total stablecoin capitalization, with market makers operating on centralized exchanges being among the largest adopters of the asset.
PayPal likely sees an opportunity to keep pace with the decline in USDC and BUSD. USDC supply is down 40% after numerous redemptions since it was unpegged in March, while BUSD’s capitalization has plummeted 87% since New York regulators ordered Paxos to halt issuance of the token in February .
Tether’s market cap has increased by 23% over the past 12 months and now accounts for two-thirds of the stablecoin market. However, Tether’s dark past and shifting currency reserves could discourage some virtual asset providers keen to seek regulators’ blessings from adopting the token, creating opportunities for companies like PYUSD to capture market share.
According to CoinGecko, the market cap of decentralized stablecoins took a tumble following the collapse of Terra’s UST token last year and has continued to decline, along with a 56% drop in DAI’s market cap since early 2022.
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