PayPal's Stablecoin Hits $1B Market Cap as Incentives Boost Activity on Solana

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Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

The stablecoin benefited from its expansion to the bustling Solana ecosystem, with its supply on the network already surpassing that on the Ethereum blockchain.Issued in conjunction with fintech company Paxos, PYUSD achieved this milestone as it more than doubled its supply since June.

Despite the broader crypto markets cooling off during the summer doldrums, PYUSD user activity also surged. Monthly active wallet addresses topped 25,000 in July, up from 9,400 in May, according toas a"watershed" moment for the broader crypto industry last year, as observers envisioned the token to eventually compete with stablecoin giants Circle's USDC and Tether's USDT.

The token's supply on Solana went to $650 million from zero in three months, and is already larger than on Ethereum. Over the past month, PYUSD supply on Solana grew by 171% and is rapidly closing in on Tether's USDT on the network, "Incentives play a huge role" in PYUSD's recent growth, said Tom Wan, business development and strategy associate at digital asset investment product firm 21.co. Integrations withall introduced boosted rewards for PYUSD deposits, offering double-digit annualized yields for token holders. Most recently, crypto custody firm Anchorage Digital alsoHowever, concerns linger about how sustainable PYUSD's growth will be if incentives phase out.

"My sense is that these incentives are not sustainable, but they are not designed to be permanent," David Shuttleworth, partner at research firm Anagram, told CoinDesk."Part of the idea here is to get more PYUSD into circulation and get users, especially new ones, on-chain and active on the Solana ecosystem."in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin.

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