PayPal’s stablecoin PYUSD has experienced a significant decline in its market cap over the last 30 days, dropping from over $1 billion to $712 million as of Sept. 25. The decrease was mainly due to a reduction in its market cap on Solana, which accounted for about 65% of its total market cap on Aug. 26. The PYUSD in circulation or locked within the Solana ecosystem has also decreased from $662 million to $364 million as of Sept. 25. However, its market cap on Ethereum has remained stable at $340 million during the same period.
Despite the decrease in market cap, the daily average transfer volume for PYUSD has remained relatively strong in the past 30 days. According to Artemis data, the stablecoin recorded an average daily transfer volume of $242.2 million, which is only $11.6 million below the daily average between July 28 and Aug. 25. While fluctuations in stablecoin market caps are not uncommon, the negative deviation in PYUSD’s market cap coincided with a 1.6% growth, or $3 billion, in the overall stablecoin market.
One of the reasons for the drop in PYUSD’s market cap could be attributed to a nearly 50% decrease in DeFi yields over the period. The yield offered for providing PYUSD as collateral on Kamino has dropped by almost 50% to 7.6% as of Sept. 24, compared to 14% in late August. Consequently, the total amount of stablecoins locked within the protocol has also decreased by 30% to $296 million from $430 million. Despite this decline, PYUSD remains the third-largest stablecoin by market cap within Solana’s ecosystem, behind Tether USD (USDT) and USD Coin (USDC).
The reduction in incentives for PYUSD holders may be linked to PayPal’s recent partnerships and announcements regarding the stablecoin. PayPal partnered with Anchorage Digital to offer stablecoin rewards, and it announced on Sept. 25 that U.S.-located business accounts can now buy, sell, and hold crypto. These moves suggest that PayPal is diversifying its incentive allocations across different fronts in hopes of attracting interest in various crypto-related areas. Overall, while PYUSD’s market cap has experienced a decline, it remains a significant player within the Solana ecosystem.
