Nikolaos Panigirtzoglou said this in a conversation with The Block publication. He speculated that with PYUSD backed by the U.S. dollar, many more companies in the future will choose Etherium or second-tier solutions to scale this network to create stablecoins or DeFi projects. As a result, this will increase activity in Etherium and make it more useful for users, the analyst emphasized.
According to Panigirtzoglu, an additional benefit of PYUSD for Etherium is also that the token will be able to fill the void created by the $20 billion decline in BUSD’s stablecoin volume. In early February, the New York State Department of Financial Services (NYDFS) required Paxos Trust to stop issuing new BUSDs due to security breaches. In July, major trading platform Binance said it would shut down five BUSD trading pairs at once.
However, some experts criticized PayPal for choosing Etherium to launch PYUSD, given the high transaction fees on that blockchain. For example, Sei Network co-founder Jayendra Jog said that gas fees using PYUSD would be huge and traders would not want to use it. To improve user engagement, PayPal will either have to pay transaction fees or enlist PYUSD’s support on other blockchains with lower fees, Jog explained.
Panigirtzoglu also added that PayPal’s stablecoin will bring traditional and decentralized finance together. However, it’s worth considering that the regulatory framework for issuers of stablecoins in the U.S. is still being developed, and regulators may tighten their regulation in the future.
As a reminder, following the recent launch of PYUSD, there have been numerous fake PayPal USD steblecoins appearing on Etherium, BNB Chain and Base.