Following the recent unveiling of PayPal’s PYUSD stablecoin, prominent analysts from JPMorgan have predicted a significant boost in Ethereum’s activity. This development comes hot on the heels of PayPal’s game-changing announcement yesterday, which caused its share prices to soar by 2.66%.
Nikolaos Panigirtzoglou, a respected analyst at JPMorgan, commented on the prospective benefits of the PYUSD launch on The Block. He emphasized the potential of PayPal’s stablecoin in amplifying the total value locked on Ethereum. “This could lead to a marked increase in Ethereum activity and further establish its reputation as a premier platform for stablecoins and DeFi projects,” stated Panigirtzoglou. Additionally, he proposed that the recent downfall of Binance’s BUSD stablecoin, under regulatory pressure, creates an avenue for PYUSD to fill the $20 billion void, potentially triggering a shift in DeFi TVL from Binance Smart Chain to Ethereum.
However, the decision to adopt Ethereum for its stablecoin hasn’t been universally praised. Concerns regarding Ethereum’s notorious high transaction fees were voiced by Jayendra Jog, co-founder of the Sei Network. “The gas fees associated with PYUSD might act as a deterrent, and to enhance user experience, PayPal might be compelled to either absorb these transaction costs or support PYUSD on alternative networks that demand lower gas fees,” remarked Jog to The Block.
Yesterday’s news revealed that PayPal’s venture into the world of stablecoins, a first for major fintech firms, symbolizes a significant vote of confidence in the crypto industry, despite recent regulatory challenges and setbacks. Notably, stablecoins have, so far, primarily been used in crypto trades rather than mainstream transactions. With PYUSD’s integration into PayPal’s vast customer base, the trend could see a change.
This ambitious move by PayPal, backed by U.S. dollar deposits and short-term U.S. Treasuries, might be an attempt to pioneer the next phase of U.S. dollars on the blockchain, as per Paxos’ statement on X, the platform previously known as Twitter. This partnership between Paxos and PayPal is seen as a revolutionary moment for the broader financial sector.
Amidst regulatory uncertainties and the still-pending stablecoin regulatory framework in the U.S., PayPal’s decision marks a significant stride for digital currencies. As reported previously, PayPal’s stablecoin, PayPal USD, will be available to its U.S. customers, marking the beginning of a new era in the evolving crypto ecosystem.