PayPal’s New Ethereum-Based Stablecoin PYUSD Sparks Mixed Sentiments in the Crypto Community
The recent launch of PayPal’s Ethereum-based stablecoin, PYUSD, has evoked mixed reactions within the crypto community. While some see it as a positive development that could drive Ethereum towards mainstream adoption, others express concerns about its potential impact on decentralization and individual asset control.
Launched on August 7 and issued by Paxos Trust Co., the same firm behind Binance USD (BUSD), PayPal USD is built on the Ethereum blockchain and is specifically designed for digital payments and Web3 applications. The stablecoin is expected to be made available to customers in the United States in the near future.
For proponents, this move is viewed as a significant boost to Ethereum adoption. Ethereum enthusiasts like Anthony Sassano and Ryan Sean Adams believe that PYUSD, as an ERC-20 stablecoin, has the potential to propel the Ethereum blockchain towards becoming the preferred monetary layer of the internet.
Ethereum’s Potential for Mass Adoption through PayPal’s PYUSD Stablecoin
Currently, the number of daily active users on the Ethereum network hovers around 300,000 to 400,000, as reported by Etherscan. However, an intriguing observation by Sean Adams suggests that approximately 430 million accounts actively use the online payment processor, implying that over 5% of the world’s population, totaling 8 billion people, could potentially be introduced to Ethereum through PayPal’s new stablecoin, PYUSD.
Launching PYUSD on Ethereum’s base layer also presents opportunities for Ethereum layer-2 solutions to interact with the stablecoin. Martin Koppelmann, the CEO and co-founder of Gnosis, emphasized the significance of this move, as it allows for increased scalability and improved user experiences on the Ethereum ecosystem.
Furthermore, the integration of PYUSD by larger institutions like PayPal is seen as a positive development by some, as it breathes new life into the traditional payments system. Lawmakers, including Patrick McHenry, chair of the United States House Committee on Financial Services, view stablecoins like PYUSD as promising elements in the modernization of the 21st-century payments system.
Overall, the introduction of PYUSD on the Ethereum network holds significant potential for expanding the platform’s user base and driving further adoption within the cryptocurrency space.
Doubts Arise Over PayPal’s New Stablecoin Due to Centralization Concerns
Despite the enthusiasm surrounding PayPal’s new stablecoin, PYUSD, some experts remain skeptical about its implementation. Smart contract auditors have pointed out that PYUSD’s smart contract includes functions like “freezefunds” and “wipefrozenfunds,” which they consider as potential centralization attack vectors within Solidity contracts. These findings have raised concerns among the crypto community about the level of decentralization and control over assets that PYUSD may offer.
PayPal’s Controversial Policy and Criticisms on PYUSD’s Engineering Choices
Back in October, PayPal faced heavy criticism over a controversial policy that could have resulted in users being fined $2,500 for spreading “misinformation.” The company later retracted the policy, claiming it was a mistake.
Meanwhile, blockchain engineer Patrick Collins offered a somewhat neutral perspective on PayPal’s PYUSD. While acknowledging its potential to be “epic,” Collins highlighted some suboptimal engineering decisions, such as using an outdated version of Solidity for programming the contract, making it upgradeable, and lacking gas efficiency.
In a separate post, Sassano elaborated that while PayPal’s stablecoin remains centralized, Ethereum users have the freedom to decide whether they want to utilize it or not, maintaining their sovereignty over their choices within the Ethereum ecosystem.