PayPal has announced that customers will soon earn a 3.7% annual yield on their stablecoin holdings, specifically in PayPal USD (PYUSD, Financial). This interest will be paid to those holding the same token, and the rewards can be used for payments and transactions within the PayPal ecosystem.
Launched in 2023, PYUSD marks PayPal as the first financial institution to introduce a dollar-backed stablecoin. Despite its launch, PYUSD holds less than 1% of the stablecoin market, which is largely dominated by Tether's USDT and Circle's USDC. Over the past year, the overall market cap for stablecoins has increased by 37%.
Unlike volatile cryptocurrencies like Bitcoin and Ethereum, stablecoins are designed to maintain a stable value relative to non-crypto assets, typically the US dollar. They have historically been used for trading and as collateral in decentralized finance (DeFi). Recently, stablecoins have gained appeal as a means of providing financial services to underserved users.
PayPal emphasizes that its use of stablecoins should focus on facilitating value transfer and exchange, aligning with its core business model in the payments sector. The company is encouraging users to purchase PYUSD by offering this yield, aiming to integrate the stablecoin within its global network.
