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Paypal\u2019s new Ethereum-based stablecoin, PYUSD<\/a> has been seen as bittersweet news for the crypto community. <\/p>\n While it could finally see Ethereum find its place in mainstream adoption, it could also spell trouble for decentralization and personal control of assets, warns the community. <\/p>\n The new stablecoin, Paypal USD, was launched on Aug. 7 and is issued by Paxos Trust Co. \u2014 the firm behind Binance USD (BUSD).<\/a> It\u2019s built on Ethereum and \u201cdesigned for digital payments and Web3,\u201d with the firm saying it will soon be available to United States customers.<\/p>\n The launch has been seen as a boon for Ethereum adoption. Ethereum bulls Anthony Sassano<\/a> and Ryan Sean Adams<\/a> believe the ERC-20 stablecoin will push the blockchain closer towards becoming the money layer of the internet. <\/p>\n This is the Ethereum contract address for PayPal’s stablecoin.<\/p>\n I can’t believe i get to tweet that.<\/p>\n We’ve come so far. pic.twitter.com\/S6kSqcV4ut<\/a><\/p>\n \u2014 RYAN S\u039eAN ADAMS – rsa.eth (@RyanSAdams) August 7, 2023<\/a><\/p><\/blockquote>\n The number of daily active users on Ethereum currently hovers between 300,000-400,000, according <\/a>to Etherscan.<\/p>\n However, Sean Adams noted that 430 million accounts actively use the online payment processor, <\/a>which means that over 5% of the world\u2019s 8 billion people could theoretically be onboarded onto Ethereum through PayPal\u2019s new stablecoin.<\/p>\n Martin Koppelmann, the CEO and co-founder of Gnosis, added<\/a> that by launching PYUSD on Ethereum\u2019s base layer, Ethereum layer-2s will be able to interact with PYUSD too. <\/p>\n Others, including lawmakers, have seen<\/a> it as another example of larger institutions embracing crypto, breathing new life into the traditional payments system. <\/p>\n In an Aug. 7 statement, Patrick McHenry, Chair of the United States House Committee on Financial Services said stablecoins like PayPal\u2019s PYUSD \u201chold promise as a pillar of our 21st century payments system.\u201d<\/p>\n #NEW<\/a>: Chairman @PatrickMcHenry<\/a> releases a statement following the announcement of PayPal’s payment stablecoin launch.<\/p>\n Read more https:\/\/t.co\/LOF9ayUNnG<\/a> pic.twitter.com\/sRfSfLYbXQ<\/a><\/p>\n \u2014 Financial Services GOP (@FinancialCmte) August 7, 2023<\/a><\/p><\/blockquote>\n However, not everyone is convinced about PayPal\u2019s new stablecoin.<\/p>\n Several smart contract auditors highlighted that PYUSD\u2019s smart contract contains a ‘freezefunds’ and ‘wipefrozenfunds’ function which they claim is a textbook example of a centralization attack vector<\/a> in Solidity contracts. <\/p>\n The new Paypal USD stablecoin has an “assetProtection” role which can wipe your balance in two transactions (first `freeze`, then `wipeFrozenAddress`)<\/p>\n In smart contract security we call this a “centralisation attack vector” pic.twitter.com\/RsmqvsnKvi<\/a><\/p>\n \u2014 pashov (@pashovkrum) August 7, 2023<\/a><\/p><\/blockquote>\n This concern was echoed by cryptocurrency researcher Chris Blec, who believes<\/a> that PayPal will use the controversial functions where necessary.<\/p>\n Digital asset lawyer Sarah Hodder believes many characteristics of PayPal\u2019s stablecoin resemble that of a censorship-enabled central bank digital currency. Another smart contract auditor noted<\/a> that PYUSD\u2019s smart contract can be changed by PayPal at any time.<\/p>\n I just read the PayPal USD terms of service. <\/p>\n – full KYC All the censorship capabilities of a CBDC, but launched by big tech instead of the gov’t.<\/p>\n \u2014 Sasha Hodder (@sashahodler) August 7, 2023<\/a><\/p><\/blockquote>\n In October, PayPal was slammed for a controversial policy that could\u2019ve seen users fined $2,500 for spreading \u201cmisinformation.\u201d The firm later backpedalled<\/a>, claiming the policy update was published \u201cin error.\u201d<\/p>\n Related: <\/em><\/strong>PayPal\u2019s crypto holdings increased by 56% in Q1 2023 to nearly $1B <\/em><\/strong><\/a><\/p>\n Meanwhile, Blockchain engineer Patrick Collins took a slightly more neutral view, suggesting<\/a> that PayPal\u2019s PYUSD could have been \u201cepic\u201d but believes some of the engineering choices were suboptimal \u2014 such as choosing an outdated version of Solidity to program the contract, making the contract upgradeable and not making it gas efficient.<\/p>\n Sassano also explained<\/a> in a separate post that while PayPal’s stablecoin is centralized, Ethereum users are free to choose whether they wish to use it or not.<\/p>\n Yes, PayPal’s stablecoin is centralized.<\/p>\n No, that doesn’t make it any less cool that PayPal has a stablecoin.<\/p>\n Ethereum being a settlement layer for all types of value means that different types of assets will exist on the network & you get to choose which ones you want to use.<\/p>\n \u2014 sassal.eth (@sassal0x) August 8, 2023<\/a><\/p><\/blockquote>\n PayPal said<\/a> PYUSD will be rolled out within the next few weeks.<\/p>\n ETH is currently priced at $1,825 which is approximately the same price at the time of PayPal\u2019s announcement about 10 hours ago, according<\/a> to CoinGecko. Only minor fluctuations have been observed in ETH\u2019s price since then.<\/p>\n Magazine: <\/em><\/strong>DeFi Dad, Hall of Flame: Ethereum is \u2018woefully undervalued\u2019 but growing more powerful<\/em><\/strong><\/a><\/p>\n<\/div>\n\n
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– custody by Paxos
– tied to your PayPal login
– PayPal can reverse any transaction
– claimed to be fully backed by actual USD<\/p>\n\n