PayPal’s PYUSD Strengthens in Stablecoin Battle: Hashdex Research

Stablecoin giants like USDT and USDC continue to strengthen their grip on the market, expanding their dominance and market share.

However, a new competitor is starting to emerge – PayPal’s PYUSD. While still relatively small, this emerging stablecoin is gaining momentum, signaling potential change, based on recent data.

Stablecoin Power Shifting?

According to a report by asset manager Hashdex’s research team, stablecoin market dominance grew by 3% in the third quarter of 2024. Both USDT and USDC, the leading fiat-backed dollar stablecoins, saw market share increases of 1% and 5%, respectively.

PayPal’s PYUSD, while still smaller than USDT and USDC, saw an incredible 57% increase in dominance over the same period.

PayPal became the first financial technology company to launch a US dollar-backed stablecoin last August. Issued by Paxos Trust Company, PYUSD is fully backed by US dollar reserves, such as Treasuries and cash equivalents. It is available to buy or sell on PayPal and Venmo and has a 1:1 exchange rate against USD.

In just 383 days after its debut, PYUSD surpassed $1 billion in market capitalization, achieving this milestone nearly twice as fast as USDC and three times as fast as USDT, the leading fiat-backed stablecoin. Following its successful launch in 2023 on Ethereum, stablecoin PayPal expanded its presence to Solana earlier this year.

HashDex Research indicates that the potential for institutional adoption via stablecoins has improved its outlook for the fourth quarter of 2024 and into next year.

“PYUSD is gaining traction and may continue to gain more market share as its distribution improves.”

Stablecoins Increasing Attraction in Fintech

Stablecoins are becoming increasingly prominent in the fintech industry. Reports suggest that Revolut, a UK-based company, is developing its own company.

Meanwhile, blockchain company Ripple also revealed plans this spring to launch a dollar-backed stablecoin, RLUSD, which would be backed by US dollar deposits, short-term government Treasuries and similar assets.

Banks like JP Morgan are also entering the transaction settlement niche, having developed JPM Coin to enable real-time payments for institutional customers.