The recent announcement of PayPal’s new Ethereum-based stablecoin, PYUSD, received a mixed reception by the crypto-community. on the one hand it will Ethereum gets mainstream adoption for the first time, On the other hand, it may represent a threat to decentralization and personal control of one’s assets.
The new stablecoin, PayPal USD, was launched on 7 August. The asset is distributed by Paxos Trust Company (the same company behind BUSD), is based on Ethereum, and was designed”For digital payments and Web3.PayPal has announced that the stablecoin will soon be available to US customers.
This is certainly positive news for the mass adoption of Ethereum. Anthony Sasano and Ryan Sean Adams they believe He PayPal’s ERC-20 stablecoin will help ETH achieve its goal of becoming the currency of the Internet,
“This is the Ethereum contract address for PayPal’s stablecoin. I can’t believe I’m tweeting about this, we’ve come a long way.”
This is the Ethereum contract address for PayPal’s stablecoin.
I can’t believe I got to tweet that.
We’ve come this far. pic.twitter.com/S6kSqcV4ut
– Ryan San Adams – rsa.eth (@RyanSAdams) 7 August 2023
According to data from Etherscan, there are currently between 300,000 and 400,000 daily active users on Ethereum. But as Sean Adams pointed out, Nearly 430 million accounts regularly use PayPal’s services: In other words, all these people were able to discover Ethereum thanks to PYUSD.
Martin Koppelman, CEO and co-founder of Gnosis, He added PYUSD Launched on Ethereum Base Layer: Here’s What It Means Layer-2 networks will be able to interact with the PayPal stablecoin,
Some MPs also commented on this news. Patrick McHenry, chairman of the US House Financial Services Committee, said that stable coins like PYUSD “They can become the mainstay of the payment system of the 21st century.,
“President Patrick McHenry issues statement following PayPal stablecoin launch announcement.”
Read more https://t.co/LOF9ayUNnG pic.twitter.com/sRfSfLYbXQ
– Financial Services GOP (@FinancialCmte) 7 August 2023
However, not all opinions are positive. Many smart contract critics have highlighted PYUSD Smart Contract Contains Potentially Dangerous FunctionsCome “FreezeFunds” and “WipeFrozenFunds:”
“The new PayPal USD stable coin has an ‘AssetProtection’ role, which can wipe users’ balances in two transactions: first ‘Freeze’, then ‘WipeFrozenAddress’.
In the smart contract security industry, this is referred to as the ‘centralization attack vector’.”
The new Paypal USD stablecoin has an “AssetProtection” role that can wipe your balance in two transactions (first ‘freeze’, then ‘wipeFrozenAddress’).
In smart contract security we call this the “centralization attack vector”. pic.twitter.com/RsmqvsnKvi
— Pashov (@pashovkrum) 7 August 2023
The fear is also shared by the cryptocurrency researcher chris blakeWhich assumes that PayPal will have no problem using these features if needed.
Digital asset advocate Sarah Hodder said that many of the characteristics of the PayPal stablecoin are similar to those of a central bank digital currency (CBDC). and so easily reprehensible,
“I just read the PayPal USD Terms of Service.
- KYC Completed.
- Hosted by Paxos.
- Linked to PayPal access data.
- PayPal can reverse any transaction.
- It claims to be fully backed by real USD.
All the censorship capabilities of a CBDC, but launched by a big tech company instead of the government.”
I just read the PayPal USD Terms of Service.
– Full KYC
– Custody by Paxos
– Linked to your PayPal login
– Paypal can reverse any transaction
– Claims to be fully backed by real USD
All the censorship capabilities of a CBDC, but launched by big tech instead of the government.
— Sasha Hodder (@sashahodler) 7 August 2023
one more smart contract auditor they added that PYUSD smart contract can be changed by the company at any time,
Read also: PayPal to hold $604 million in bitcoin and other cryptocurrencies by the end of 2022
On the other hand, the view of blockchain engineer patrick collins, In his opinion, PayPal could have managed the PYUSD project better, but unfortunately the company did not make optimal engineering choices: the contract was programmed with an older version of solidityand it turns out gas ineffective
In a later post, Sasano accepted PayPal stablecoin is indeed centralized, but Ethereum users are free to choose whether to use it or not,
“Yes, the PayPal stablecoin is centralized.
No, this does not mean that PayPal has launched a stablecoin, it is none the less incredible.
Ethereum is the settlement layer for every type of value. This means that there will be a variety of assets on the network, and users will be able to choose which ones to use.”
Yes, PayPal’s stablecoin is centralized.
No, this does not mean that PayPal has a stablecoin.
Ethereum being a settlement layer for all types of value means that different types of assets will exist on the network and you will have to choose which ones you want to use.
— sassal.eth (@sassal0x) 8 August 2023
Paypal said that PYUSD will be launched in the coming weeks,
anyhow, it seems This news had no effect on the price of ETH: It is currently at $1,840, up 0.7% from yesterday.