The findings disclosed by the blockchain analytics firm Nansen show PayPal’s stablecoin is struggling to convince adoption despite the hyped debut as a game-changer. The recent report shows the early adoption contrasts the optimism portrayed by crypto enthusiasts of PayPal’s stablecoin PYUSD, likely to break Tether’s stablecoin USDT dominance.
Nansen reports that the assessment of early adoption portrays slow uptake contrary to the projected pace of uptake. The initial projection considered that PYUSD would leverage the hundreds of millions of users to gain traction upon its release to the masses.
PayPal Stablecoin Unable to Convince Interest and Adoption
The on-chain data analysis by Nansen revealed that PYUSD faces difficulty in gaining meaningful adoption among the masses. The analytic firm indicates that 90% of the PYUSD holdings still lie within the wallets of stablecoin issuer Paxos Trust.
The Nansen report indicated that PYUSD holdings within the crypto exchange wallets estimate 7% of the supply. The report traces the balances held within Kraken, Crypto.com, and Gate.io. The firm found that professional and informed investors identify parties pursuing smart money as having negligible adoption.
Nansen acknowledges PayPal’s stablecoin had, in its early August debut, attracted high expectations. Crypto enthusiasts predicted that PayPal’s stablecoin would accelerate broader adoption.
Stablecoin enthusiasts believed that PYUSD would facilitate the introduction of cryptos to the masses reliant on the fintech payment firm. They cited that the American multinational serves a user base exceeding 350 million in its portfolio. Nansen analysis shows that only a few users have utilized the PYUSD or held the stablecoin within the self-custody wallets.
Nansen Findings Shows Declining Interest in PYUSD
The figures reveal that the initial weeks’ usage hardly met the hype. The analysis shows declined demand from crypto users. The users show declining interest as they embrace the existing alternatives. Nansen’s research indicates that the potential reason for decreased demand is that Paypal targets a different demographic.
Nansen reports that a review of the decentralized exchange pools, including PYUSD/USDC and PYUSD/wETH in Uniswap, have tokens below 50,000. The analysis shows a moderate interest level, with the largest holder only accounting for barely $ 10,000 worth of the PYUSD.
Further analysis shows the holder, not an exchange, acquired the PYUSD stablecoin after disposing of three memecoins. The data indicate that holders with balances surpassing $1000 other than contracts and sales are hardly ten.
Nansen considers the modest uptake attributed to the awareness that PYUSD stablecoin circulation is barely three weeks. Also, PYUSD was unveiled without an update on the forthcoming stablecoin development.
PayPal’s stablecoin is running on the Ethereum network and leveraging dollar deposits alongside cash equivalents and short-term Treasury for its reserve system. Paxos Trust Co issues the dollar-pegged stablecoin. Its unveiling triggered an industry-wide response as established crypto competitors raced for realignments.
PYUSD’s Established Competitors Announce Realignment to Boost Stablecoin Adoption
Circle announced realignment alongside its partner Coinbase for the USD Coin stablecoin (USDC). Circle indicated it would expand to six blockchains besides the nine networks to boost USDC adoption.
A review of CoinmarketCap data shows that PYUSD has a gigantic mountain to climb to dethrone the leading stablecoins. In particular, USDC market capitalization is estimated at $25 billion, while Tether’s USDT exceeds $82 billion as per CoinMarketCap data.
Tether also announced several fundamental changes, including discontinuing the Bitcoin Omni Layer version. The termination arises from declining usage and the absence of popular tokens on the network. Nonetheless, Tether indicated the ongoing RGB development to guarantee its return to the Bitcoin network.
PayPal’s stablecoin would take longer to establish a footing capable of threatening USDT dominance. Besides the $82.8 billion market capitalization, Tether’s USDT daily volume transaction rose by 27.94% to an average of $13.99B. USD Coin (USDC) realized a 35% rise in the daily transaction volume to $1.9 billion, as per CoinMarketCap data.
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