PayPal’s recent launch of the Ethereum-based stablecoin, PYUSD, has generated mixed reactions within the crypto community.
While some see it as a positive step towards mainstream adoption for Ethereum, others are concerned about its potential impact on decentralization and personal asset control.
The stablecoin, also known as PayPal USD, was introduced on August 7 and is issued by Paxos Trust Co., the same firm behind Binance USD (BUSD).
Built on the Ethereum blockchain, it aims to facilitate digital payments and Web3 functionalities and will soon be available to customers in the United States.
Ethereum proponents, such as Anthony Sassano and Ryan Sean Adams, view the introduction of this ERC-20 stablecoin as a significant boost to Ethereum adoption, bringing it closer to becoming the money layer of the internet.
With around 300,000 to 400,000 daily active users on Ethereum, the potential for PayPal’s vast user base of 430 million accounts to be onboarded onto Ethereum through PYUSD is seen as noteworthy progress.
However, some experts have expressed reservations about PayPal’s stablecoin.
Certain smart contract auditors have pointed out that PYUSD’s smart contract includes functions like “freezefunds” and “wipefrozenfunds,” which are considered centralization attack vectors.
This has raised concerns about the potential misuse of these functions by PayPal.
The stablecoin’s characteristics have been likened to a censorship-enabled central bank digital currency by digital asset lawyer Sarah Hodder.
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Another smart contract auditor has observed that PayPal retains the ability to modify PYUSD’s smart contract at any time, which could raise questions about true decentralization.
The crypto community recalls PayPal’s controversial policy in the past, which could have resulted in user fines for spreading “misinformation.”
Although the company later retracted the policy, such incidents have left some skeptical about PayPal’s intentions with PYUSD.
Blockchain engineer Patrick Collins remains neutral, acknowledging that while PYUSD has potential, some engineering choices could have been more optimal.
For example, he suggests that using an outdated version of Solidity to program the contract and making it upgradeable might have drawbacks.
Despite these concerns, PayPal’s PYUSD is expected to be rolled out in the coming weeks.
Ethereum’s price has shown minor fluctuations since the announcement, maintaining a similar value of around $1,825.
In conclusion, PayPal’s introduction of PYUSD has sparked both enthusiasm and caution within the crypto community.
While it may promote Ethereum adoption, concerns about centralization and the control of assets warrant close scrutiny as the stablecoin is implemented.
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