PayPal USDs Expansion to Arbitrum: What it Means for the Stablecoin

Solana which had previously overthrown Ethereum in terms of Dominance in August 2024, was down to 24.6%. Solanas initial surge in dominance was largely driven by high yields on the stablecoin.

The yields which were aimed at boosting adoption have since declined. As a result, PayPal USD volumes have declined considerably, revealing that it was yet to attain critical organic mass.

According to DeFiLlama, the stablecoins volumes on Ethereum network were down by 16% in the last 4 weeks and 3.20% on the Solana network. Berachain had the highest dip at over 24%. However, volumes on Flow network were up by 10.5%.

The retreating volumes may explain why PYUSDs marketcap has been struggling to stay above $1 billion. Another potential reason could be the heavy outflows as liquidity flowed into Bitcoin and altcoins.

However, some of the top stablecoins such as USDT and USDC still maintained healthy marketcap growth during the same period. This meant the stablecoins declining marketcap was likely not due to the recent rally but rather linked to limited adoption.

The expansion into Arbitrum raised question as to whether Arbitrum may offer a Hail Mary for the PayPal USD stablecoin. On-chain data recently revealed that the Ethereum layer 2 had the highest net bridge flows.

It was thus a no-brainer that Arbitrum was the next best destination in PayPal USDs expansion journey.