PayPal Stablecoin Market Cap Plummets 30%, Solana DeFi Yields Dive

Source: cryptoslate

Compiled by: Blockchain Knight

On-chain data shows that PayPal's stablecoin PYUSD has seen its market capitalization shrink nearly 30% over the past 30 days, declining from over $1 billion to $712 million as of September 25.

The main reason for the decline in market cap is a significant reduction on Solana, where PYUSD’s market cap accounted for about 65% of the total on August 26.

As of September 25, the amount of PYUSD circulating or locked within the Solana ecosystem has dropped from $662 million to $364 million.

In contrast, its market cap on Ethereum has remained stable during this period at $340 million.

However, according to Artemis data, PYUSD has maintained relatively high average daily transaction volumes over the past 30 days. The stablecoin averaged $242.2 million in daily transfers, only $11.6 million lower than the average between July 28 and August 25.

Although volatility in stablecoin market caps is not uncommon, PYUSD’s negative deviation occurred while the overall stablecoin market grew nearly 1.6%, or $3 billion.

The decline may be attributed to DeFi yields dropping nearly 50% during this period.

As of September 24, the yield for providing PYUSD as collateral on Kamino had fallen nearly 50% to 7.6%, down from 14% at the end of August.

Consequently, the total amount of stablecoins locked in the protocol dropped from $430 million to $296 million, a 30% decrease.

Despite the decline in market cap, PYUSD remains the third-largest stablecoin by market cap within the Solana ecosystem, behind Tether USD (USDT) with $728 million and USDCoin (USDC) with $2.6 billion.

Notably, the reduction in incentives could be related to a series of partnerships involving PYUSD that PayPal is reportedly winding down. According to Fortune magazine on August 22, PayPal partnered with Anchorage Digital to offer stablecoin rewards.

Therefore, PayPal may redirect reward distributions into different areas, aiming to capture benefits across various domains related to crypto assets.

In addition, Bloomberg reported that on September 25, PayPal announced it would allow U.S.-based business accounts to buy, sell, and hold crypto assets.