- PayPal introduces PYUSD on Stellar Blockchain.
- Could be mutually beneficial as PayPal gains tech in exchange for offering users to Stellar.
- PayPal could then develop its own DeFi marketplace on Stellar.
With PYUSD’s introduction to the Stellar blockchain PayPal aims to take benefits of the blockchain’s fast and low cost transactions which was not possible in Ethereum (where PYUSD was first launched). Ethereum is lot more expensive and too much slower than Stellar.
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PYUSD’s Unique Roadblock
Just after its launch PayPal PYUSD stablecoin met a significant roadblock due to its centralization. This was complicated further by Ethereum’s lack of adoption its high transaction fees and slower transaction times. Ethereum was falling way behind Solana, Stellar and other major blockchains even though it had the Dencun Upgrade on 13 March 2024.
PYUSD needed a blockchain which could not ensure faster transactions but could also cost a lot less in terms of blockchain fees. Stellar was probably chosen as a stopgap measure, or until Ethereum completely implemented its Sharding Protocol and scale its blockchain to the targeted 100,000 transactions per second.
Why Stellar?
Stellar as a blockchain was chosen because it closely resembled XRPL’s architecture. Both Stellar and XRPL are both money-transfer oriented blockchains and are meant to transfer funds from one part of the world to another quickly and cheaply.
What’s in Store for DeFi?
PayPal integrating Stellar with its platform means that it will grant more strength to the people ecosystem rather than being the other way round. If PayPal had joined the XRPL ledger instead of Stellar it would be one among many stablecoins on that chain. However, on Stellar, it could emerge as the dominant partner with its 400 million users.
The current setup it could make Stellar a monopsony of PayPal, which then could emerge as one of the largest DeFi services provider among TradFi companies.
PayPal could then introduce services like staking, lending, borrowing, liquidity pools, restaking and lot other tasks on it’s own platform. The end benefit would be reaped by PayPal and its 400 million users. However, Stellar would also gain access to PayPal’s huge userbase in the process.
