Adoption of PYUSD, the stablecoin that Paypal launched earlier this month, is progressing slowly, Nansen said.
In a recent analysis, on-chain data analytics firm Nansen indicated that the stablecoin designed by Paypal to streamline global payments is currently struggling to find widespread acceptance among the company's users.
Due to the challenges of early adoption of the Paypal stablecoin, very few people are using this asset today, Nansen noted.
Earlier this month, the global financial services company announced the launch of its new stablecoin, called PYUSD, which is based on Ethereum and denominated in US dollars and was designed with the aim of reducing the friction of payments in new digital environments and bringing millions of users closer to Web3.
Although Paypal clarified that this new stable currency would be available, for the moment, only to its American users, the company, which has more than 440 million users around the world, among retailers and individual consumers, expected a significant adoption of its stablecoin in the country.
Also, some analysts hinted that Paypal's stablecoin could start tough competition against the main stablecoins in the market, USDT and USDC and that it would drive mass adoption of cryptocurrencies.
However, Nansen's data shows that the opposite is happening. So far, stablecoin users and crypto industry traders appear to be avoiding PYUSD, the firm noted, highlighting that the early adoption challenges faced by PYUSD may be motivated by centralization and commission fees. Apparently, these are the main obstacles that may be affecting a more significant adoption of the Paypal stablecoin.
According to the blockchain analysis platform, more than 90% of the PYUSD supply is being guarded by Paxos, another 7% of the stablecoin supply is held by exchanges and only about 10 individual holders maintain balances between $1.000 and $10.000 in the stablecoin.
Nansen also pointed out that users in the crypto industry may prefer other options that exist in the ecosystem to interact in the blockchain and to carry out operations. “There is a lack of crypto user demand for PYUSD when other alternatives exist.”
Furthermore, The Block highlighted that users' lack of interest in Paypal's stablecoin may be because the company is targeting a different demographic.
Last month, US lawmakers introduced new regulation for stablecoins, which focuses on investor security and establishing clear rules that allow the development of the crypto industry. However, this is a bill that is in full debate and must still be approved by the House of Representatives and Congress.
Continue reading: The United States begins to advance crypto regulation
