PayPal’s PYUSD stablecoin, trailing behind more established stablecoins such as USDT and USDC, is turning to DeFi to boost its liquidity. In December, PYUSD activated the Curve automated market maker and is now seeking deployment on Aave.
PayPal’s entry into the stablecoin ecosystem with PYUSD generated significant buzz as it marked the first time a major financial entity offered a stablecoin. However, the stablecoin market is currently dominated by Tether (USDT) and Circle, raising concerns about the viability of PYUSD. At present, PYUSD serves as a medium for trading cryptocurrencies on centralized exchanges, but its trade volumes are significantly lower than those of established stablecoins.
Paxos, the entity behind PYUSD, has partnered with Trident Digital to address this issue. Trident Digital, a crypto platform that helps institutions improve a token’s on-chain liquidity, assisted PYUSD in activating the Curve automated market maker and is also aiding in its Aave proposal.
On December 27, 2023, Curve launched the FRAXPYUSD liquidity pool, which has a total value locked (TVL) of $135 million, making it the third-largest liquidity pool on Curve. The pool includes Frax Finance’s collateralized algorithmic stablecoin, FRAX. The FRAXPYUSD pool allows FRAX holders to swap their tokens for PYUSD and use it for purchases and remittances on the PayPal app. Since its inception, the pool has seen an average daily trading volume of $5.5 million.
Aave is currently voting on whether to onboard the PYUSD stablecoin into its Ethereum pool. The initial vote is set to conclude on January 11, 2024. If the proposal passes, Paxos and other associated parties will seed the liquidity pool with $5-10 million in liquidity, according to Trident, which is behind the proposal. The aim is to maintain high yields on Curve, which will create organic borrowing demand for PYUSD on AAVE.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Global |
| Countries | |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | None |
| Companies | Curve, Paxos, Trident Digital, Aave, PayPal |
| Currencies | PayPal USD, USDC, Frax Ether, Tether |
| Securities | None |
