PayPal has chosen the Solana blockchain to expand its stablecoin, PayPal USD (PYUSD), marking its first move beyond the Ethereum ecosystem.
According to an announcement on May 28, PYUSD has been added to the Solana network, allowing users to perform transactions at a lower cost. The move seeks to expand the uses of PYUSD stablecoin as a payment method for small and daily purchases.
Solana processes up to 65,000 transactions per second at costs as low as $0.0025, significantly outpacing Ethereum’s 15 transactions per second with higher fees, which may vary from $1 to $50 during times of congestion. In other words, while a transaction on Ethereum could take a few minutes to process, the same transfer using Solana could be completed in less than a minute.
“Making PYUSD available on the Solana Blockchain furthers our mission of enabling a digital currency with a stable value designed for commerce and payments,” PayPal’s senior vice president of blockchain, Jose Fernandez da Ponte, said in a statement.
PayPal and Venmo wallet users will have a chain-agnostic experience, meaning PYUSD balances will be unified regardless of the network holding the assets.
The Solana network surged as the most used blockchain for stablecoin transfers since last year. According to data from analytics platform Artemis, stablecoin transfer volume on Solana reached $1.5 trillion over the past year, largely surpassing Ethereum’s volume of $885 billion over the same period.
The Solana blockchain also faces challenges, mainly related to recurring network outages. The latest episode unfolded on Feb. 9, when transactions were down for nearly five hours. An upgrade called Firedancer will be released in the coming months to increase Solana’s overall reliability and scalability.
A stablecoin is a cryptocurrency designed to maintain a constant value by pegged to a more stable reserve asset, usually a fiat currency like the U.S. dollar.
PayPal launched its stablecoin in August 2023 in collaboration with Paxos Trust Company. The stablecoin was initially issued only on Ethereum as an ERC-20 token and is backed by U.S. dollar deposits, short-term Treasurys, and cash equivalents.
Data from DefiLlama shows that Tether (USDT) currently controls nearly 70% of the stablecoin market with a market capitalization of approximately $111 billion, while PYUSD is currently worth $272.96 million.
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