DEFIFINANCE

PayPal's stablecoin PYUSD goes live on Curve's third-largest liquidity pool, while Aave proposal is simultaneously underway.

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PayPal

In August this year, PayPal launched the stablecoin "PYUSD." Despite being the first stablecoin introduced by a major fintech giant, the discussion around it quickly cooled off. With a market ranking of 163, its adoption has been slow. Following its listing on exchanges like Kraken and Coinbase, PYUSD has shifted its focus towards DeFi protocols.

The stablecoin PYUSD has revealed its reserve proof for the first time, with US Treasuries RRP as its reserve. Currently, its application is mostly within the PayPal ecosystem.

Proposal: Deploy PYUSD on Aave Ethereum Market

The proposal to deploy PYUSD on the Aave v3 Ethereum market has passed the temporary check, with a consensus rate of 99.96% in the temperature check. The proposal highlights several incentives:

  • PYUSD is still in its early stages, but its circulating supply has exceeded $230 million.

  • It can create a synergistic effect between Aave and PYUSD.

  • It provides Aave users with an additional stablecoin option.

  • It strengthens the relationship between PYUSD and the GHO stablecoin.

Aave Overcollateralized Stablecoin GHO Officially Launched! Pledgers Can Get Up to 30% Discount on Interest Rates

The proposal currently does not recommend opening PYUSD as collateral, but only as a borrowing asset, with an initial borrowing limit of 20 million PYUSD.

Aave Proposal

PYUSD Listed on Curve, Becomes Third Largest Liquidity Pool

The liquidity pool "FRAXPYUSD," composed of PYUSD and the stablecoin protocol Frax Finance FRAX, went live on December 27, with a TVL of $135 million, ranking third. However, the liquidity in the pool is imbalanced:

  • FRAX: 81.59%

  • PYUSD: 18.41%

Frax Finance founder Sam Kazemian explained to CoinDesk:

FRAX is somewhat like the on-chain liquidity of PYUSD, while the latter is the off-chain fiat cash-out channel. With the indirect integration between Frax and PayPal payment app, FRAXPYUSD may see further growth.

Curve Liquidity Pool, Ranked by TVL

The Aave proposal and FRAXPYUSD liquidity pool are both driven by the digital asset company Trident Digital. Since the end of 2023, Paxos has started a partnership with Trident Digital to enhance the on-chain liquidity of PYUSD.

Trident co-founder Anthony DeMartino told Blockworks that he believes the demand from users for yields in the FRAXPYUSD liquidity pool will increase the borrowing rates for PYUSD on Aave, thereby incentivizing low-risk investors to deposit PYUSD into Aave.