Aave Considers Supporting PayPal's PYUSD Stablecoin
Leading Ethereum lending protocol Aave is seeking community input on supporting PayPal's PYUSD stablecoin.
Since its launch in August 2023, PYUSD, the stablecoin issued by global digital payments giant PayPal, has struggled to find its footing in the cryptocurrency sector. Consequently, its issuer Paxos has been working on strategies to improve its adoption.
According to CoinMarketCap, the total supply of PYUSD at the time of writing stands at $273 million, a significant increase from its initial $44 million, yet it pales in comparison to the tens of billions in total supply of stablecoins like USDT, USDC, and DAI. PYUSD's 24-hour trading volume is only $20.4 million, which is relatively low for a stablecoin intended for widespread use.
In efforts to boost PYUSD's acceptance, Paxos is pushing to integrate the stablecoin into the DeFi space. After establishing a pool on Curve in late December 2023, Paxos is now advocating for PYUSD's inclusion on the Aave lending protocol.
Aave is currently conducting a community consultation on supporting PYUSD, with the voting deadline set for January 11. If approved, this will become a formal proposal for the community to vote on once more.
Community Proposal on Aave for Lending PYUSD
Paxos believes that being accepted by Curve and Aave could provide a significant boost for PYUSD, as DeFi investors would have added incentives to borrow the stablecoin from Aave to earn interest on Curve. Paxos and its partner, Trident, plan to supply $5-10 million in liquidity for PYUSD if Aave supports it.
Despite these efforts, questions remain about PYUSD's practical use. When first announcing the stablecoin, PayPal hinted at enabling PYUSD for payments on its app, but no further details have been provided. PayPal has also listed PYUSD on several centralized exchanges (CEXs) such as Coinbase, Kraken, Bybit, and HTX (Huobi), signaling an intention for trading use, yet adoption levels remain modest.
Moving Forward
The decision to support PYUSD on Aave could potentially enhance the stablecoin's utility and visibility within the DeFi ecosystem. The outcome of the community vote and subsequent proposal will determine the next steps for PYUSD's integration into Aave's lending platform.
Stay tuned for further updates as the community feedback and voting process unfold.
