Online payments giant PayPal has announced that it will launch its own stablecoin, PYUSD, which will run on the Ethereum blockchain.
According to JPMorgan analysts, this move could have positive consequences for the world's largest altcoin, Ethereum.
JPMorgan analyst Nikolaos Panigirtzoglou said that PayPal's stablecoin could benefit Ethereum in two ways. First, it could increase Ethereum's effectiveness and utility as a platform for stablecoins and decentralized finance (DeFi) applications.
“In other words, in the future, more companies will be encouraged to choose the Ethereum blockchain (or its layer 2 platforms) for their stablecoin or decentralized projects,” Panigirtzoglou said.
Second, the gap left by the closing of Binance's BUSD stablecoin, one of the largest stablecoins in the market, could be filled. Binance was forced to close its BUSD stablecoin earlier this year after facing regulatory pressure from US authorities. Although BUSD is still operating, its influence has waned considerably and the new token cannot be minted.
Panigirtzoglou said that if PYUSD fills this gap, “DeFi total locked value (TVL) will shift from Binance Smart Chain to Ethereum blockchain (or its layer 2 platforms)”.
*Not investment advice.