DeFi Sector Brief: PayPal, Curve, and Maker

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PayPal Announces PYUSD

Source: PayPal

PayPal is making its way into onchain payments with the release of its PayPal USD (PYUSD) stablecoin. The Web2 payments giant has partnered with Paxos for PYUSD issuance and is using the Tether and Circle playbook to back PYUSD with U.S. dollar deposits and short-term U.S. treasuries. PYUSD is issued as an ERC-20 token on Ethereum Mainnet but awaits support for PayPal's U.S. clientele.

Given the potential profits from U.S. treasuries yielding over 5% and the huge market presence of USDT and USDC, PayPal's move makes sense from a financial perspective. While PayPal's vast network can facilitate PYUSD distribution, its success depends on merchant acceptance and potential benefits like reduced fees. As mentioned last week, PYUSD could help merchants avoid their standard 1.5% - 3.5% fees from existing payment providers. However, regulatory ambiguities in the U.S. regarding stablecoins pose a large headwind for near-term adoption.