Launched by payments giant PayPal, the PYUSD “stablecoin” could benefit Ethereum by increasing the total value of funds locked up (TVL). This was stated by The Block analyst at JPMorgan Nikolaos Panigirtzoglou.
“This has the potential to increase activity on Ethereum and improve network utility as a stablecoin/DeFi platform. In other words, in the future, more firms will choose blockchain (or L2 solutions based on it) for their projects,” the expert said.
According to him, Ethereum could benefit from filling the PYUSD niche created by the $20 billion reduction in the supply of BUSD stablecoin from Binance. In February, the New York regulator ordered the coin’s issuer, infrastructure company Paxos, to stop issuing new assets.
“TVL in DeFi will move from Binance Smart Chain to the Ethereum blockchain or its second-tier platforms,” Panigirtzoglu said.
However, some experts have criticized PayPal for choosing a network to issue a stablecoin, given the high transaction fees in Ethereum.
Sei Network co-founder Jayendra Jog believes that gas fees will reduce the incentive to use PYUSD. In his opinion, the company will need to either subsidize the costs of users, or provide support for the coin in other networks with lower costs.
JPMorgan analysts said that PayPal’s entry into the stablecoin business will increase payment network synergies in both traditional and decentralized finance.
“However, it is important to emphasize that the regulatory framework for stablecoin issuers in the US is still under review, and the simplified rules used by fintech companies may change in the future,” they stressed.
Recall that Kaiko specialists announced the return of the “stablecoin wars”.
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