PayPal’s dollar-denominated 
PYUSD +0.069% token has been losing market share since hitting a high above $1 billion at the end of August when it was the fourth-largest stablecoin. The token has a current market capitalization of $618 million, a 40% decrease over the past month and a half.
PayPal USD was launched in August 2023 on the Ethereum 
ETH +0.90% mainnet and became available on the Solana 
SOL +0.76% blockchain on May 29, 2024. By mid-August, PayPal's stablecoin supply on Solana surpassed its supply on Ethereum.
The stablecoin’s growth was largely propelled by a partnership between PayPal and Kamino Finance, a Solana lending market that agreed to pay generous yields to PYUSD holders subsidized by the payments giant. In recent weeks, the yield paid on PYUSD deposits on Kamino, the sixth-largest lending protocol by TVL on any chain, has dropped from around 17% to below 7%. Solana-based protocols Drift and Marginfi have also seen their double-digit annualized rewards for PYUSD holders take a hit.
“PYUSD circulating supply has completely round tripped as the @KaminoFinance incentives they were blasting out have tapered off,” DragonFly Capital managing partner Haseeb Qureshi said on X. “What's the lesson here?”
However, the trend may end up reversing. On Tuesday, Kamino added PYUSD to its “altcoin market,” enabling users to borrow against their WIF, POPCAT, and BONK memecoin positions. The arrangement will pay depositors an extra $10,000 in PYUSD rewards in total per week.
By comparison, PYUSD lenders on Etheruem-based decentralized exchange Aave currently earn around 4.3%.
Over a similar six-week period, the market capitalizations for the two largest stablecoins, USDT and USDC, have stayed relatively static. Since Aug. 31, Tether’s stablecoin gained an extra $1 billion in market capitalization, while Circle’s token gained and then lost $2 billion in value.
The Solana-based PYUSD market capitalization now stands at about $267 million, down from a high above $600 million set in August. Meanwhile, over $350 million PYUSD tokens are in circulation on Ethereum.
That said, the total cross-chain PYUSD market capitalization is still up 375% year-over-year, according to CoinGecko data. It is currently the ninth-largest stablecoin by market capitalization.
The Block contacted PayPal for comment and will update the story upon receiving a response.
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