Stablecoin News – On July 12, 2025, PayPal announced further expansion of its PayPal USD (PYUSD) stablecoin on the Solana blockchain, aiming to enhance speed and cost-efficiency for retail transactions.
Initially launched on Ethereum in August 2023, PYUSD’s integration with Solana, announced at Consensus 2024, leverages the blockchain’s ability to process 1,423 transactions per second at sub-cent costs, compared to Ethereum’s slower, costlier network.
With a $715 million market cap, PYUSD ranks as a top stablecoin on Solana, behind USDT ($728 million) and USDC ($2.6 billion).
PayPal’s move targets retail and cross-border payments, where Solana’s high throughput and low fees—averaging under three cents—offer advantages over traditional systems like SWIFT, which charge $9.61 for a $200 remittance.
PYUSD, issued by Paxos Trust Company under New York State Department of Financial Services oversight, is backed 1:1 by U.S. dollar deposits and Treasuries, ensuring redeemability at $1 per token.
PayPal’s integration with platforms like Crypto.com and Phantom, alongside its Venmo wallet, simplifies fiat-to-crypto transfers, enhancing user accessibility.
The expansion follows PayPal’s April 2025 introduction of a 3.7% annual yield on PYUSD balances to spur adoption.
However, PYUSD’s market cap on Solana dropped 30% from $1 billion in August 2024 to $712 million by September, driven by declining DeFi incentives on platforms like Kamino, where yields fell from 18% to 9.24%, per Blockworks.
This reflects “yield farming” challenges, where users chase higher returns elsewhere, raising questions about long-term stability.
PayPal’s focus on payments, not DeFi, aligns with its vision to revolutionize commerce, as stated by Jose Fernandez da Ponte, SVP of PayPal’s Blockchain Group: “PYUSD enables fast, inexpensive payments for the digital economy.”
The company’s recent business payment via PYUSD on an SAP SE platform underscores its enterprise potential. However, Solana’s history of network outages and regulatory pressures, including the BIS’s call for global standards, pose risks.
As the U.S. debates the GENIUS Act and the EU enforces MiCA, PayPal’s Solana expansion positions PYUSD as a fintech contender. Yet, sustaining growth requires balancing user incentives with regulatory compliance and blockchain reliability to compete with USDT and USDC in the $253 billion stablecoin market.
