It's been a couple of weeks since USDT lost its $1 peg, and despite a few recent rebounds, the biggest stablecoin by market cap, and probably trading volume, in the crypto space is no longer pegged to the dollar. We Hivers are used to such depeggings, as HBD is almost never pegged with the dollar due to "algorithmic stablecoin volatility."
I'm fine with $0.97 HBD, and I'm fine with $0.998 USDT as well. As I've mentioned in several of my recent posts, I don't believe Tether will fall anytime soon. It's too big to fail, and its ramifications extend beyond the crypto realm. Crypto needs stablecoins, and stablecoins need crypto, but the use cases of stablecoins should also be found outside the crypto realm.
Take, for example, payments and money transfers. According to the latest news, it seems that PayPal has created its own stablecoin minted on the Ethereum network. Why Ethereum? That's beyond my understanding, as this chain is far from being cheap to use.
Anyway, is PayPal a threat to USDT, USDC, or HBD?
Yes and no.
"We don't expect any impact on USDT," Ardoino told The Block. That's because PayPal stablecoin (PYUSD) has been launched in the U.S., where Tether does not serve, said Ardoino. But when asked if PYSDC launches in international markets, Ardoino said it would be positive for the crypto industry in general.
"It's interesting. Another stablecoin in the U.S. It could lead to the erosion of revenues for payments that have been mainly fueling Mastercard and Visa. It will also help the industry to grow further and push for sensible regulations," he added.
source
USDT remains unthreatened by PYSDC because it doesn't cater to American markets. Moreover, USDT isn't currently functioning as a payment currency; its primary use case revolves around crypto-to-crypto trading and acting as a refuge during periods of high volatility, providing traders a safe haven from intense price fluctuations.
Now, what about USDC?
"It's unclear when/if PYUSD will be listed on large exchanges, so it may be focused on the cross-platform payments use case to start," Wells said. "Longer-term PYUSD will likely compete with USDC in crypto trading market share as well, potentially in DeFi [decentralized finance] marketplaces."
Anders Helseth, vice president at crypto research firm K33, echoed Wells. “I think an important factor in the short term is whether any exchanges adopt the PayPal stablecoin,” Helseth told The Block.
source
Hey there, Mr. Anders Helseth, it seems Huobi has jumped the gun by listing PayPal's stablecoin. But let's be real, Huobi's crypto reputation isn't exactly sparkling, making this news more of a side note. Now, onto the big question: Will Binance step into the PYSDC arena? My gut says no. They've got their heavyweight contender, BUSD, and a newcomer like PYSDC doesn't stand much of a chance.
PYSDC won't be chowing down on any established stablecoin's lunch anytime soon, and it certainly won't ruffle HBD's feathers (that's Hive-backed dollar, in case you missed it). PYSDC flaunts the badge of establishment, touting the pedigree of programmable money—a topic I've been yammering about for ages.
Sure, it opens the stablecoin doors a tad wider, and maybe, just maybe, PYSDC could moonlight as a payments currency, giving the masses a taste of "internet money." But, and it's a big but, it's got some serious kinks in its armor.
You see, PayPal's stablecoin contract is scribbled in an ancient version of Solidity. Pause transfers? Check. Freeze addresses? Check. Boost the total supply on a whim? Check. Sounds like a control freak's dream, huh?
But honestly, what did you expect from the PayPal posse? They're part of the establishment, and you know they're playing by the establishment's rules. Now, let's not kid ourselves—programmable money isn't just gonna be central bank digital currencies (CBDCs). Nah, this slick form of currency will be served up to the masses by retail-style money issuers too.
The debut of PayPal's stablecoin? Yeah, it's a thumbs-up in my book. It's like a golden ticket confirming that stablecoins are gonna be rubbing shoulders with the big shots in the future financial scene. And guess what? It's also lighting a fire under the butts of those decentralization junkies, urging them to conjure up some spicy alternatives. Your take on the matter?
Thanks for your attention,
Adrian