PayPal has chosen the Solana blockchain for expanding its stablecoin, PayPal USD (PYUSD), beyond the Ethereum ecosystem.
The Solana blockchain has been selected by PayPal as the platform for the expansion of its stablecoin, PayPal USD, as a first step beyond the Ethereum ecosystem, signifying its first move. According to a statement that was released on May 28th, the PYUSD cryptocurrency has been integrated into the Solana network, which enables users to conduct transactions at a reduced cost.
By taking this action, the goal is to broaden the application of the PYUSD stablecoin as a payment option for day-to-day and smaller purchases. When compared to Ethereum’s 15 transactions per second with higher fees, which can range anywhere from $1 to $50 during periods of congestion, Solana processes up to 65,000 transactions per second at prices as low as $0.0025.
This is a huge advantage over Ethereum. To put it another way, the processing time for a transaction on Ethereum could be a few minutes, whereas the same transfer could be finished in less than a minute if it were done using Solana.
The senior vice president of blockchain at PayPal, Jose Fernandez da Ponte, recently issued a statement in which he said, “Making PYUSD available on the Solana Blockchain furthers our mission of enabling a digital currency with a stable value designed for commerce and payments.
Users of PayPal and Venmo wallets will be able to combine their PYUSD balances regardless of the network handling the assets, enabling a chain-agnostic experience. Since the previous year, the Solana network has emerged as the most popular blockchain for stablecoin transfers.
According to information provided by the analytics platform Artemis, the volume of stablecoin transfers on Solana reached $1.5 trillion over the course of the previous year. This figure is significantly more than Ethereum’s throughput, which was $885 billion during the same time period.
The Solana blockchain is likewise confronted with difficulties, most of which are associated with recurrent network failures. During the most recent incident, which took place on February 9th, transactions were unavailable for close to five hours.
The upcoming months will see the delivery of an upgrade known as Firedancer, which will improve the general dependability and scalability of Solana. Stablecoins, a type of cryptocurrency, aim to maintain their value stability by tying them to a more stable reserve asset.
This reserve asset is typically a fiat currency, such as the United States dollar. Through a partnership with Paxos Trust Company, PayPal officially introduced its stablecoin in the month of August 2023. In the beginning, the stablecoin was exclusively available on Ethereum in the form of an ERC-20 token.
It is supported by deposits of United States dollars, short-term Treasury securities, and cash equivalents, respectively. According to information provided by DefiLlama, Tether presently holds a market capitalization of roughly $111 billion, which is equivalent to nearly 70 percent of the stablecoin market. Conversely, DefiLlama currently estimates the value of PYUSD at $272.96 million.