PayPal Taps Solana to Expand PYUSD Stablecoin Beyond Ethereum

PayPal has Announced which has chosen the Solana blockchain to expand its stablecoin, PayPal USD (PYUSD), marking the company's first step beyond the ethereum ecosystem.

This integration aims to allow users to make transactions at a lower cost and focus the use of PYUSD as a payment method for everyday purchases. The announcement comes as Solana's SOL token positions itself as the fifth-largest cryptocurrency by market cap, with estimates from Franklin Templeton suggesting that Solana is positioned to become the third-largest crypto asset after bitcoin and ethereum.

José Fernández da Ponte, senior vice president of PayPal's blockchain division, says that integration with the Solana blockchain for PYUSD would provide “a fast, easy and economical payment method” to improve consumer and merchant experiences in a digital economy growing.

Solana's blockchain technology touts 65,000 transactions per second at costs as low as $0.0025. Compared to ethereum, which can handle approximately 15 transactions per second with fees ranging from $1 to $50 (during peak congestion, with peak gas fees). CoinGecko recently published a study claiming that Solana's average TPS is 46 times faster than ethereum.

This means that based on these numbers, transactions on Solana can be completed in less than a minute, while the same transfer on ethereum could take several minutes. In particular, the use of Solana as a network for stablecoin transfers has increased over the past year, according to a crypto-solana-dethrones-ethereum-in-stablecoin-transfer-volume” rel=”noopener nofollow noreferrer”>study Led by Artemis.

According to PayPal, its users will join Venmo wallet users in an off-chain experience for PYUSD, meaning their stablecoin balances will be unified regardless of the network where the assets are held. This seamless integration ensures that users can easily manage their stablecoin funds without worrying about the underlying blockchain infrastructure.

Despite its advantages, the Solana blockchain faces challenges, mainly related to recurring network outages. The most recent incident occurred in early February, when transactions were down for almost five hours. To address these issues and improve the overall reliability and scalability of Solana, an update called Firedancer is scheduled for release in the coming months.