Paypal’s token, PYUSD, pegged to the dollar, has lost 40% of its market cap. Currently, the stablecoin’s market capitalization stands at $618 M. Lowered yield opportunities on platforms such as Drift and Kamino are reportedly behind the recent downturn.
In the last days of August, the market cap of PYUSD reached a peak of $1B, making it the fourth-largest stablecoin at that time. The token is now capped at $618 million, a 40% drop after just one and a half months.
PayPal’s PYUSD experiences a 40% downturn weeks after its peak
PYUSD, aka Paypal USD, was launched in August last year on the Ethereum blockchain. On May 29, 2024, It became available on the Solana blockchain. In the second week of August, the amount of the stablecoin was greater on Solana than on Ethereum. This meant its demand was better on Solana than on its home blockchain, Ethereum.
The PayPal USD stablecoin is part of PayPal's mission to revolutionize commerce globally. This weekend, we reached a major milestone: over $1 billion in market capitalization! This is just the beginning, and we’re excited to keep growing for the future. pic.twitter.com/QEsaIkKf4Q
— PayPal (@PayPal) August 26, 2024
The partnership between PayPal and Kamino Finance catalyzed the stablecoin’s growth by paying generous yields to the token holders. However, in the past weeks, Kamino has dropped the yields paid to below 7%.Â
Drift and MarginFi, Solana-based protocols, also saw reduced rewards to PYUSD token holders. According to DragonFly Capital managing partner Haseeb Qureshi, the reduced Kamino incentives are the largest contributors to the reduced PYUSD supply.
However, on Tuesday, Kamino added the stablecoin to the altcoin market, which will allow users to use their WIF, POPCAT, and BONK meme coin positions as collateral. The lending protocol will reportedly pay an additional $10,000 in rewards every week. Lenders on Aave, an Ethereum-based decentralized exchange, earn 4.3% in yields.
Other Stablecoins remain static amid the plummetÂ
USDC and USDT’s market caps have remained static in the past month and a half despite PYUSD’s decline. According to CoinMarketCap data, Tether’s market cap is at $119 billion at the time of writing, a one-billion-dollar increase in the past month. Circle’s token, on the other hand, experienced a brief gain before losing $2 billion in market cap value.
Coinmarketcap indicated in August that PYUSD had entered a competitive level with USDT and USDC, which had market caps of approximately $118 billion and $35 billion, respectively. At the time, PYUSD had a market cap of $1 billion.
CoinGecko data on October 16 revealed that Solana-based PYUSD’s market cap stood at approximately $267 million, a decline of over $400 million since August. The total number of tokens in circulation on the Ethereum Mainnet is also over $350 million.Â
The data also indicated the current total cross-chain PYUSD market cap is still rising 375% year over year, and the token holds a ninth-place position by market cap.Â
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