Nansen: ~90% of PayPal's stablecoin is held in issuer Paxos Trust's wallets, suggesting a “lack of demand from crypto users for PYUSD” that launched on August 7
Ana Paula Pereira / Cointelegraph :
Context & Ripple Effects
PYUSD was introduced as a Paxos-issued, dollar-backed stablecoin with a gradual US rollout. Less than three weeks after that initial launch, Nansen's wallet analysis indicates that most of the outstanding supply remained with the issuer rather than circulating among crypto users.
That concentration matters because a stablecoin's utility in crypto markets depends on usable, distributed supply, not merely issuance and backing.
First-order effects
- Nansen's finding makes PYUSD's early on-chain circulation look limited: roughly 90% of supply sat in Paxos Trust wallets rather than in external user wallets.
- PayPal and Paxos face an immediate adoption test: converting a broadly recognizable payments brand and an available token into active crypto-user holdings.
Second-order effects
- Low external float can constrain PYUSD's near-term usefulness for trading, transfers, and integration by crypto services, since counterparties have less token supply to work with.
- The result increases pressure on distribution channels beyond the initial rollout; PayPal subsequently moved to broaden access by enabling select Venmo users to buy PYUSD in an expanded Venmo rollout.
Third-order effects
- The episode underscores the crypto legitimacy gap: brand recognition and fully backed issuance do not by themselves create network usage or liquidity.
- If issuer-held balances remain the norm for new payment-company stablecoins, competition may turn less on launch announcements and more on distribution, wallet access, and practical transaction use.
The trend: Stablecoin entrants are increasingly being judged by circulating adoption and distribution, rather than by the credibility of their issuer or reserve backing alone.