Liquidity Pool Comprising PayPal’s PYUSD Stablecoin on Curve Locks $135 Million in Value
A liquidity pool comprising PayPal’s dollar-backed stablecoin PYUSD on Curve has locked $135 million in total value, an indication that the stablecoin is gaining traction in decentralized finance (DeFi).
The new liquidity pool, known as the FRAXPYUSD pool , went live on December 27 and is the third largest on Curve, trailing only the popular 3pool.
The FRAXPYUSD pool consists of PYUSD, issued by regulated company Paxos, and Frax Finance’s collateralized algorithmic stablecoin, FRAX.
A liquidity pool is a reserve of multiple cryptocurrencies locked in a smart contract, enabling asset exchanges on decentralized exchanges.
Curve, specifically designed for stablecoin swaps, is widely used by traders seeking to convert one stablecoin into another, making its activity an indicator of interest from larger investors.
The FRAXPYUSD pool allows traders who hold FRAX to exchange it for PYUSD, which they can then utilize on the PayPal app for purchases and remittances.
Currently, the liquidity in the pool is imbalanced, with FRAX accounting for over 80% of the total liquidity. Since its launch, the pool has seen an average daily trading volume of $5.5 million.
While PayPal’s PYUSD is still behind industry leaders Tether and Circle in terms of adoption, it is gradually making its way into DeFi.
PYUSD’s daily trading volume reached a peak of $9 million in December but has recently stabilized at around $4 million. In comparison, Tether’s USDT records a 24-hour trading volume of over $55 billion.
The growing liquidity in DeFi is seen as a positive sign, indicating that PayPal is investing resources to expand the stablecoin’s usage beyond payments and within the PayPal app for crypto trading activities.
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