PayPal's PYUSD Gains Momentum on Ethereum, Poses a Challenge to Leading Stablecoins

PayPal’s PYUSD stablecoin has generated notable attention in the crypto community, especially on the

blockchain, where its circulating amount has reached close to $8 billion. The recent uptick of PYUSD on Ethereum underscores the growing role of stablecoins as a connector between conventional financial systems and blockchain transactions. According to Token Terminal, PYUSD’s supply on Ethereum soared from about $2.5 billion at the beginning of 2024 to nearly $9 billion by mid-2024, before slightly dropping and settling above $8 billion by mid-2025. Comparatively, PYUSD’s presence on has seen a more restrained increase, reaching a high of $4 billion at the end of 2024 but then declining to less than $2 billion in the months after.

Ethereum’s leading position in supporting PYUSD’s growth comes from its mature DeFi ecosystem and its strong reputation for security and dependability. As Ethereum continues to implement upgrades that make transactions cheaper and the network more scalable, it has become an increasingly attractive platform for stablecoin transactions, outshining Solana’s appeal for speedy transfers. PayPal’s focus on Ethereum is likely due to its deeper integration with the company’s payment systems, potentially boosting PYUSD’s use for regular transactions like person-to-person payments, online shopping, and cross-border remittances.

The rise of PYUSD on Ethereum is more than a technical milestone—it has wider consequences for the stablecoin sector and the larger digital currency world. As PYUSD’s supply expands, it faces off more directly against established stablecoins like

and , which have led the market since their launch. USDC, for instance, held a market cap exceeding $62 billion by mid-2025—much greater than PYUSD’s $898 million. Still, PayPal’s entry into the stablecoin arena brings added credibility and infrastructure, thanks to the company’s extensive user base and its global payments reach. The chance for PYUSD to be smoothly integrated with PayPal’s network of over 35 million merchants could further establish its presence in routine digital payments.

PYUSD’s strategy of operating on multiple blockchains makes it adaptable. After its debut on Ethereum, PYUSD expanded onto Solana, taking advantage of Solana’s rapid settlement and minimal fees. This approach gives users the flexibility to select the blockchain that best fits their priorities—be that speed or security. Additionally, PYUSD’s partnership with LayerZero, a protocol enabling cross-chain interaction, allows effortless movements of tokens between Ethereum and Solana, enhancing its appeal for DeFi and multi-chain operations.

Despite these strengths, PYUSD is not free from drawbacks. Critics point to its centralized controls, such as the issuer’s authority to freeze or erase balances, which could conflict with blockchain’s decentralized philosophy. Its dependence on Ethereum’s smart contract infrastructure also introduces risks, as vulnerabilities in other DeFi projects have shown. Regulatory oversight is yet another hurdle, as stablecoins are subject to evolving and sometimes stringent compliance standards worldwide. Although the U.S. SEC ended its PYUSD investigation without action, the general regulatory landscape remains unpredictable and could impact the coin’s expansion and user adoption.

Looking at the stablecoin market, PYUSD’s recent supply changes have contrasted with those of other tokens. For example, Ethena’s USDE experienced an 8.82% decrease in supply over the past 13 days, whereas PYUSD expanded its supply by over 70% in the same timeframe. This disparity highlights the fierce competition among stablecoins, where user preferences and regulation can quickly shift market dynamics. PYUSD’s prospects will rely on its capacity to sustain supply growth and broaden its usefulness for both retail investors and institutions as the market matures.

PYUSD’s future will likely hinge on balancing innovation and regulatory compliance.

has already made moves to attract users by offering perks such as a 3.7% annual yield on PYUSD balances within its PayPal and Venmo apps. These benefits, together with the company’s strong record of compliance and its multi-chain rollout, position PYUSD as a significant competitor among stablecoins. Nonetheless, whether it can rival the dominance of USDC and USDT is yet to be determined, given those coins’ established reputations, widespread adoption, institutional backing, and global reach.