Launched by the payments giant PayPal, the stablecoin PYUSD could benefit Ethereum by increasing the total value locked (TVL). This was stated by The Block analyst Nikos Panigirtzoglou.
“This could boost activity on Ethereum and improve its network utility as a platform for stablecoins/DeFi. In other words, in the future more firms will choose the blockchain (or L2-solutions on it) for their projects,” the expert said.
According to him, Ethereum could gain additional benefits from filling the PYUSD niche created by the $20 billion reduction in the supply of Binance’s stablecoin BUSD. In February, the New York regulator ordered the coin’s issuer—Paxos, the infrastructure company—to cease issuing new assets.
“TVL in DeFi will move from Binance Smart Chain to the Ethereum blockchain or its L2-solutions on it,” Panigirtzoglou said.
However, some experts criticised PayPal for choosing the network to issue the stablecoin, given Ethereum’s high transaction fees.
Sei Network co-founder Jaiendra Jog argues that gas fees will dampen the incentive to use PYUSD. In his view, companies will need to either subsidize user costs or support the coin on other networks with lower costs.
JPMorgan analysts said that PayPal’s entry into the stablecoin business will enhance the synergies between payment networks in both traditional and decentralized finance.
“However, it is important to note that the regulatory framework for stablecoin issuers in the United States is still under consideration, and the simplified rules used by fintech firms could change in the future,” they stressed.
Kaiko said that the ‘stablecoin wars’ are returning.