PayPal's PYUSD Rises on Ethereum, Challenges Stablecoin Titans

PayPal’s stablecoin, PYUSD, has sparked significant interest within the cryptocurrency ecosystem, particularly on the Ethereum blockchain, where its total supply has grown to approximately $8 billion. The recent surge in PYUSD on Ethereum highlights the increasing adoption of stablecoins as a bridge between traditional finance and blockchain-based transactions. Data from Token Terminal reveals a dramatic increase in PYUSD’s supply on Ethereum, rising from around $2.5 billion in early 2024 to nearly $9 billion by mid-2024, before retracting slightly and stabilizing at over $8 billion by mid-2025. In contrast, PYUSD’s growth on Solana has been more modest, peaking at $4 billion in late 2024 but declining to under $2 billion in the following months.

The dominance of Ethereum in PYUSD’s supply growth is attributed to several factors, including Ethereum’s robust DeFi ecosystem and its reputation for security and reliability. As Ethereum continues to benefit from network upgrades that reduce transaction costs and improve scalability, it has become a more attractive platform for stablecoin use compared to Solana, where high-speed transactions have traditionally drawn attention. PayPal’s strategic emphasis on Ethereum likely stems from its broader integration into the company’s payment infrastructure, which could enhance PYUSD’s utility for everyday transactions such as peer-to-peer transfers, e-commerce, and remittances.

Moreover, the expansion of PYUSD on Ethereum is not merely a technical or economic development; it has broader implications for the stablecoin market and the wider cryptocurrency landscape. As PYUSD’s supply increases, it competes more directly with other stablecoins such as USDC and USDT, which have dominated the market since their inception. USDC, in particular, has maintained a market capitalization of over $62 billion as of mid-2025, significantly outpacing PYUSD’s $898 million. However, PayPal’s entry into the stablecoin market brings a new layer of legitimacy and infrastructure to the space, particularly given the company’s vast user base and global payment network. The potential for PYUSD to integrate seamlessly with PayPal’s 35 million+ merchant ecosystem could further cement its role in everyday digital transactions.

PYUSD’s multi-chain strategy also positions it as a versatile stablecoin. Initially launched on Ethereum, it has since expanded to Solana, leveraging the latter’s low transaction costs and fast settlement times. This multi-chain approach allows users to choose the most cost-effective and efficient blockchain for their needs, whether they prioritize speed or security. Furthermore, PYUSD’s integration with LayerZero—a cross-chain interoperability protocol—enables seamless transfers between Ethereum and Solana, enhancing its utility in DeFi applications and cross-chain use cases.

Despite its advantages, PYUSD is not without risks. Critics have raised concerns about its centralized features, such as the ability for the issuer to freeze or wipe balances, which could undermine the decentralized ethos of blockchain technology. Additionally, its reliance on Ethereum’s smart contracts exposes it to potential vulnerabilities, as seen in recent exploits of other DeFi protocols. Regulatory scrutiny is another challenge, as stablecoins face increasingly complex compliance requirements across jurisdictions. While the U.S. SEC concluded its investigation of PYUSD without enforcement action, the broader regulatory environment remains uncertain, potentially affecting the token’s growth and adoption.

In terms of market dynamics, the recent supply fluctuations of PYUSD contrast with the trends observed in other stablecoins. For example, Ethena’s USDE saw a supply decline of 8.82% in the past 13 days, while PYUSD’s supply grew by more than 70% over the same period. This divergence underscores the competitive nature of the stablecoin market, where shifts in user demand and regulatory frameworks can rapidly alter market positions. As the stablecoin market evolves, PYUSD’s ability to maintain its supply growth and expand its utility across both retail and institutional use cases will be key to its long-term success.

The future of PYUSD will likely depend on its ability to balance innovation with compliance. PayPal has already taken steps to enhance its appeal to users by introducing incentives such as a 3.7% annual yield on PYUSD holdings within its Venmo and PayPal apps. These initiatives, combined with the company’s strong regulatory compliance and multi-chain strategy, position PYUSD as a formidable player in the stablecoin space. However, whether it can challenge the dominance of USDC and USDT remains to be seen, as both have established themselves as trusted and widely adopted stablecoins with extensive institutional support and global infrastructure.