PayPal USD (PYUSD), the stablecoin launched by PayPal, has experienced a remarkable 216% growth in less than 90 days. New data from DeFiLlama indicates a significant increase in the stablecoin’s circulation and on-chain usage. This expansion occurs at a time when sentiment surrounding stablecoin issuers is evolving, particularly as Tether faces renewed regulatory scrutiny.
PayPal USD Surges to Sixth-Largest Stablecoin
As of September 2025, PayPal USD held a market capitalization of $1.28 billion. In less than three months, increased payment activity and broader blockchain availability have propelled its market cap to $3.8 billion, more than tripling the supply in circulation.
A primary catalyst for this growth is PayPal’s recent expansion to Solana and Arbitrum through LayerZero integration. This integration facilitates cross-chain transfers and enhances liquidity across decentralized finance platforms. The improved accessibility has coincided with a rise in Web3 users utilizing PYUSD for payments and routing trades.
PayPal's PYUSD has grown from $1.2B market cap in September to over $3.8B today. Track over 300 stablecoins on DefiLlama.
Launched on August 7, 2023, PayPal USD is a fully backed, Ethereum-based stablecoin issued by Paxos. At its launch, PayPal became the first major U.S. financial firm to introduce a dollar-backed digital asset. A stablecoin is a type of cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the U.S. dollar, thus avoiding the price volatility seen in assets like Bitcoin or other cryptocurrencies. It is intended to function as a digital dollar, combining the speed of cryptocurrency transactions with the stability of fiat currency.
PYUSD’s rapid ascent follows PayPal's introduction of a new peer-to-peer feature called “links.” This feature allows users to send funds via a single, shareable link, integrated into Venmo and other PayPal services, simplifying the transfer of stablecoins across platforms and within conversations.
The stablecoin's presence on major exchanges such as KuCoin, alongside its integration into Venmo’s P2P system, has contributed to its increasing usage in both retail payment flows and crypto-specific transactions.
Tether Faces Pressure Over Transparency
The momentum of PYUSD stands in contrast to the challenges faced by Tether (USDT), the stablecoin with the largest market capitalization. S&P Global Ratings downgraded Tether to “5 (weak)” on its stablecoin risk scale on November 26. This downgrade was attributed to limited transparency and increasing exposure to higher-risk assets, including Bitcoin, gold, corporate debt, and secured loans.
Arthur Hayes, co-founder of BitMEX, has also voiced criticism regarding Tether’s reserve composition, suggesting the firm is engaged in a substantial interest rate trade. Hayes pointed to Tether’s latest attestation, stating that a potential 30% drawdown in its Bitcoin and gold holdings could, in his view, “wipe out their equity.” This scenario could lead to theoretical solvency concerns if interest rates decline and asset prices fall.
Currently, PayPal USD ranks as the sixth-largest stablecoin with a market capitalization of $3.82 billion. In comparison, USDT by Tether has a market capitalization of $184.72 billion, according to data from CoinMarketCap.