Seamlessly Integrating with the Web2 Business Environment! The Uses and Development of PayPal's Stablecoin PYUSD

PayPal was founded in 1998 and is an online third-party payment service provider, with Musk being one of the co-founders. Currently, PayPal is the largest third-party payment provider globally. In Taiwan, PayPal collaborates with E.SUN Bank, allowing users to withdraw USD or TWD from their PayPal account using E.SUN Bank's E.SUN Global Pass.

Starting from 2020, PayPal entered the cryptocurrency market, allowing users to buy, sell, and hold cryptocurrencies. The stablecoin issued by PayPal, PYUSD (PayPal USD), was officially launched in August 2023. During this year's Consensus conference on May 29th, PayPal announced a partnership with Solana. PYUSD currently ranks seventh in market capitalization. PYUSD is issued by Paxos with a circulation of $399 million, while USDT has a circulation of $112 billion.

Will PayPal's stablecoin change DeFi? The restrictions of PYUSD, the PayPal USD, that you may not be aware of.

Use and Development of PayPal Stablecoin PYUSD

Since 2020, PayPal's blockchain development department has been deploying cryptocurrency payment functions, allowing users to make payments using cryptocurrencies. Users with cryptocurrencies in their PayPal accounts can choose to pay with cryptocurrencies. The development of cryptocurrency e-commerce services is gradually expanding, with a focus on blockchain technology.

PayPal Wallet Enables Buying and Selling of Cryptocurrencies

PayPal has introduced the functionality to buy, hold, and sell cryptocurrencies for its U.S. users. Through a technical partnership with stablecoin issuer Paxos, PayPal has enhanced its cryptocurrency payment function with "Checkout with Crypto" and expanded the cryptocurrency trading services into the UK. This allows consumers to store and transact with cryptocurrencies on PayPal. Enabling cryptocurrency transfers on PayPal marks a new milestone for stablecoin e-commerce transactions.

Analysis of PayPal's stablecoin PYUSD | Profit mechanism, use cases, and advantages compared to USDT?

PayPal and Venmo wallets have user-friendly interfaces, allowing users to send PYUSD on Ethereum or Solana. PYUSD is compatible with Ledger cold wallets, MetaMask wallets, and can be stored within them.

Regulation of PayPal by New York Authorities

PayPal holds a virtual currency business license issued by the New York State Department of Financial Services. The issuer, Paxos, is also a government-chartered trust company.

Paxos' products, including blockchain technology and cryptocurrency trading, are regulated by the New York State Department of Financial Services. The reserve funds for PayPal USD are backed by equivalent assets such as U.S. dollar deposits, U.S. Treasury securities, and cash. The issuance and custody of PayPal USD are managed by Paxos.

PYUSD Supports Various Blockchain Applications

PYUSD PayPal USD follows the Ethereum ERC-20 standard and supports multiple blockchains.

PYUSD is a stablecoin system designed for Web3, supporting transactions with third-party exchanges, wallets, decentralized applications (dApps), and NFT markets. PYUSD helps developers integrate Web3 payment functions and serves as an interface for Web3 compatibility.

Developers can use PYUSD to create their own products. By easily connecting traditional financial services with stable, open, programmable, and regulated cryptocurrencies, PayPal's PYUSD deployment also includes its use as a token for the metaverse, trading NFTs, and more.

PayPal Wallet's Inclusivity and Web2 Applications

PayPal Wallet can receive stablecoins from other self-custody wallets and offers more flexible use cases, such as salary payments, invoices, company expenses, and cross-border settlements in B2B transactions.

Unlike USDC and USDT widely used in DeFi exchanges and derivative financial products, the newly issued PYUSD focuses on commercial payment functions, supporting integration with various blockchain technologies to facilitate smoother commercial transactions between the U.S., the UK, and the EU. PYUSD from PayPal Wallet can be transferred to Ethereum or Solana addresses.

Business Protection Offered by PYUSD

PYUSD can be bought and sold at a 1:1 ratio with the U.S. dollar through PayPal and Venmo. Some compliant U.S. users can buy and sell PYUSD without transaction fees. The issuance of PYUSD stablecoin pegged to the U.S. dollar holds significance, as during inflation periods, global small and medium-sized traders can control costs by using the stablecoin, saving on international exchange rates and balancing expenses. Unlike other cryptocurrencies with uncertain classifications, the U.S. dollar stablecoin is not categorized as a security or stock.

Possible Issues with PYUSD

Some online observers point out that if PayPal's past protection of payment terms (i.e., the recipient or e-commerce buyer must receive the goods before payment is made, and if the buyer is dissatisfied, a full refund is required) were to be applied to PYUSD, losses could occur in cases of fraudulent claims where the recipient falsely claims non-receipt of goods after receiving them. If blockchain transactions are beyond PayPal's control, freezing and recovering funds may become challenging.

Predicted Development through Solana Collaboration

PYUSD aims to target the global business market. At the Consensus conference on May 29, 2024, PayPal officially announced the integration of PYUSD with the Solana blockchain. This blockchain technology upgrade allows consumers to choose the blockchain on which they want to use PYUSD. PayPal users and business owners can transact across fiat currencies, stablecoins, and various blockchains.

Solana blockchain is known for its low costs and high-speed processing of transactions. The selection of Solana's token extension technology for PYUSD stablecoin enables encrypted transmission of transactions, calling of program hooks, and completion of transfer records, allowing businesses requiring frequent cross-border transactions to receive payments faster.

Crypto.com, Phantom, and Paxos are the first to offer early users the ability to use PYUSD on the Solana blockchain. The future applications of PYUSD in collaboration with Solana may drive the NFT market on Solana, develop Web3 games and metaverse, and enhance e-commerce platforms. With a foundation supporting multiple games and NFT teams, the collaboration with PayPal could spark a new wave of token economy, combining game tokens and payment exchanges to bring in global gamers and new users who were previously unreachable by PayPal.

By leveraging PayPal's leading position in third-party payments and combining it with PYUSD wallet technology, integrating with platforms like X or other social media for subscription payments could generate additional revenue for content creators.