PayPal Integrates Its U.S. Dollar-Pegged Stablecoin (PYUSD) with LayerZero, Enabling Cross-Blockchain Transfers between Ethereum and Solana

The integration, unveiled on November 12, 2024, enables seamless transfers of PYUSD between the Ethereum and Solana blockchains.

PayPal’s U.S. dollar-pegged stablecoin, PayPal USD (PYUSD), is now fully integrated with LayerZero, a cross-blockchain bridging protocol. This development, announced on November 12, 2024, marks a significant advancement for PYUSD, enabling seamless transfers of the stablecoin between the Ethereum and Solana blockchains.

The integration is designed to enhance transaction efficiency, reduce liquidity fragmentation, and provide users with faster, more secure, and cost-effective options for transferring PYUSD across different blockchain networks.

This new capability is made possible by LayerZero’s Omnichain Fungible Token (OFT) Standard, which allows different blockchains to communicate and interact seamlessly. With OFT Standard, a token like PYUSD can be easily deployed on multiple blockchains, creating a unified and interconnected token ecosystem.

In the case of PYUSD, the integration with LayerZero enables the stablecoin to be transferred between Ethereum and Solana without the need for users to rely on centralized platforms like Venmo or PayPal for cross-chain transactions. This integration provides a more decentralized and flexible solution for moving PYUSD across different blockchains.

Commenting on the development, Jose Fernandez da Ponte, PayPal’s Senior Vice President, highlighted the benefits of this integration for PYUSD holders. He noted that the LayerZero technology adds another layer of seamlessness and flexibility to the stablecoin, ensuring that transactions are fast, secure, and cost-effective for both users and businesses.

To further enhance the security of PYUSD transactions, especially during cross-chain transfers, PayPal has collaborated with Paxos, Google Cloud, and LayerZero Labs to operate a decentralized verifier network (DVN).

This network is responsible for conducting verification checks during PYUSD transactions, ensuring the validity and authenticity of each transfer. By involving Paxos, Google Cloud, and LayerZero Labs in this process, PayPal is creating a decentralized and resilient layer of verification that spans multiple parties.

This decentralized approach to verification is designed to provide a high level of assurance for PYUSD transactions of all sizes, ranging from small retail payments to large institutional trades. Moreover, the involvement of these reputable entities adds another layer of trust and credibility to the stablecoin.

The integration of PayPal USD (PYUSD) with LayerZero has already had a noticeable impact on the market. According to DeFiLlama’s data, the market cap of PYUSD on Ethereum has remained relatively stable at around $350 million.

However, the supply of PYUSD on Solana has seen a dramatic decline, shifting from more than $660 million in August to a mere $186 million now. This shift in supply suggests a preference for Ethereum as the primary network for PYUSD transactions.

Despite its recent successes, PYUSD still lags behind leading stablecoins like Tether (USDT) and USDC, which have market capitalizations of nearly $118 billion and $35 billion, respectively.

Nevertheless, the integration with LayerZero positions PYUSD to better compete in the stablecoin market by offering enhanced cross-chain capabilities, which could further drive adoption and use cases for the stablecoin.