The stablecoin market has increased during the third quarter of the year, especially that of one in particular: PayPal USD (PYUSD). During this period, the dominance of stablecoins in the cryptoasset market increased by 3%, representing almost 7% of the total. This was partly due to the dominance of the niche's top two assets, tether (USDT) and USD Coin (USDC), which grew 1% and 5% respectively. However, the one that contributed the most was PYUSD. This is shown in a new research report by Hashdex, a Brazilian investment company. “The stablecoin giants continue to grow, but a major competitor is emerging,” the company notes in this regard. Although PYUSD is still small cap compared to USDT and USDC, experienced a notable 57% increase in its domain in the third quarter. “Since its successful launch on Ethereum in 2023 and its recent expansion to Solana, PYUSD is gaining traction and could continue to capture more market share as its distribution increases,” warns Hashdex. With a capitalization of 600 million dollars (USD), it is positioned as the sixth largest stablecoin and in 111th place in the total ranking of crypto assets. This can be seen in the following table.
Stablecoins with the highest market capitalization. Source: CoinMarketCap. This is despite the fact that its capitalization decreased after reaching the all-time high of USD 1 billion in August driven by its expansion to Solana, reported by BitcoinDynamic. Hashdex emphasizes that it reached this mark only 383 days after its launch, which It is about two times faster than USDC and three times faster than USDT.
PayPal positions itself as a strong player in the stablecoin market
The great traction of PYUSD may be due to the fact that it is issued by PayPal, which is one of the largest payment platforms globally. In this sense, The entry of a large financial player into the stablecoin market may prove to be strong competition for USDT and USDC. “The rapid growth of PYUSD highlights PayPal's intention to use public blockchains as new infrastructure for modern payments,” says Hashdex. Therefore, he maintains that this not only involves adoption of his stablecoin, but also of the cryptocurrency market in general. “As PYUSD gradually spreads to the hundreds of millions of PayPal customers around the world, it has the potential to introduce a new wave of users to blockchain ecosystems such as Ethereum and Solana,” concludes the investment company.
What are stablecoins and what are they used for?
Stablecoins are a type of cryptocurrency (or, more precisely, token) designed to maintain a stable value being backed by assets such as the US dollar or gold. Unlike volatile cryptoassets, such as bitcoin (BTC) or ether (ETH), stablecoins do not have fluctuations in their price (with respect to the underlying asset). This makes them a valuable tool in various situations. An important use of stablecoins is as a refuge in inflationary economies. In countries with high levels of inflation, such as Argentina or Venezuela, stablecoins allow citizens dollarize your savings without having to access the traditional banking systemproviding an alternative to protect against the devaluation of the local currency. Another key use is in international tradewhere stablecoins facilitate fast and cheap payments without the need for intermediaries such as banks. Being backed by fiat currencies, they are a reliable option for companies that operate in multiple countries and want to avoid currency fluctuations. Also are used in decentralized finance (DeFi), where stablecoins are an essential component in lending, savings and smart contract protocols. Users can earn returns on their stablecoins or borrow against them without having to leave the crypto ecosystem. Additionally, stablecoins facilitate the exchange between cryptocurrencies, acting as a bridge for traders who want to move quickly between different assets without exposing themselves to the volatility of bitcoin or other altcoins.