Decentralized Platform Aave Wins Community Votes to Onboard PYUSD Stablecoin

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Sujha Sundararajan

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Sujha Sundararajan

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January 11, 2024 04:47 EST

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Aave, a decentralized platform that allows users to borrow/lend crypto, might consider adding PayPal’s PYUSD stablecoins to its Ethereum pool.

The platform proposed its plans to integrate PYUSD stablecoin in December, seeking community vote. The voting window was open from Jan 8 to Jan 11.

Per Snapshot data, Aave received a 99.99% vote from its token holders, in favor of integrating PayPal’s PYUSD stablecoin. More than 460K Aave community members said yes to the onboarding of the stablecoin.

The Proposal

Aave stressed that one of the main reasons to choose PYUSD is its increasing circulation supply, which has grown over $230 million with stronger resilience.

“The PYUSD token was introduced a few months ago, and since its launch, its market cap has increased to approximately $230million.”

It added that in the upcoming weeks, “the pool will be scaled further with incentives” to reach the required liquidity to support the proposed market parameters.

Further, Aave noted that the integration would build synergies between Aave and the stablecoin. It would also strengthen the relationship between the PYUSD and Aave’s native GHO stablecoin.

AAVE stands as the world’s third-largest DeFi solution, comprising nearly $5 billion worth of crypto assets locked, according to Dappradar.

The voting follows decentralized exchange Curve’s decision to integrate PYUSD stablecoin in December.

According to Clara Medalie, the Director of Expansion at DeFi research firm Kaiko, PYUSD’s deployment on centralized exchanges represents that the token is meant to be used for crypto trading as well. Medalie further added that all stablecoins face tough competition against Tether (USDT).

“It will be hard for PayPal to compete against USDT considering the majority of crypto liquidity is denominated in this stablecoin,” Medalie said.

PayPal’s PYUSD is issued by crypto firm Paxos, which formerly issued Binance’s BUSD stablecoin. In February 2023, the New York Department of Financial Services (NYDFS) forced Paxos to cease the issuance of BUSD. Paxos then began contracting with a digital asset firm named Trident Digital to boost PYUSD’s on-chain liquidity.