Paxos enters the hot Solana ecosystem, USDP ushers in new life?

By Loopy, Odaily

Recently, a regulatory development on Paxos has caught our attention. Paxos received approval from the New York Department of Financial Services (NYDFS) to expand its Stable Coin offering business to the Solana Blockchain. It should be emphasized that even if the previous volume is as large as BUSD, it is still only regulated and approved to be issued on the Ethereum network.

This move marks the first time Paxos has expanded its business beyond Ethereum into the crypto world.

Paxos used to be known for its BUSD business. In February 2023, BUSD was suddenly regulated by NYDFS. After BUSD was shut down, Paxos gradually weakened in the Stable Coin competitive landscape. And will the approval of the Solana business bring new growth points to Paxos, and even stir up the relatively stable Stable Coin market?

Paxos’ market share is shrinking, and the challenger halo is fading

If we look at it on a cyclical scale, we can see the dramatic development of Paxos.

Historical data shows that during the Bear Market in 2022, the Market Cap of USDT and USDC “doubles” once declined slowly. Paxos’ BUSD, on the other hand, continued to rise slowly, reaching an all-time high of more than $23 billion.

And after the regulatory sanctions, Paxos lost BUSD. USDP has never been able to make much waves in the Stable Coin market.

DeFiLlama data shows that the current Stable Coin market is still two dominant. Although BUSD once became the third largest stable coin, the market share of Paxos’ Market Maker USDP is still at a low level.

According to DeFiLlama, the total Market Cap of Stable Coins is about $130.7 billion. USDT and USDC together account for 88% of the Stable Coin market share.

Although USDP is the ninth largest stable coin, it is far from being able to compete with the long-term duo of the Stable Coin market in terms of share.

Currently, the total Market Cap of USDP is only $370 million. When compared to the peak of BUSD, it is equivalent to only 1.6% of BUSD.

This data seems to be a little ugly for the former third in the market. The announcement of expanding the business into the Solana ecosystem may bring new vitality to Paxos.

Solana Stable Coin Use Case Growth, Can Paxos Fly?

In recent days, the SOL Token has continued to skyrocket, bringing the Solana ecosystem back to the center of the market. DeFiLlama data shows that the TVL of the Solana ecosystem has risen nearly 5 times since the beginning of this year.

As Solana continues to grow by leaps and bounds, while we don’t yet know where Solana will go in the future, the community and the market have high hopes for it.

The future of Solana still seems to be one of the underlying narratives with compliance.

Currently, SOL has become the fourth-largest Crypto Assets by Market Cap, and SOL is the third-largest Crypto Assets after BTC and ETH if USDT is not included in the ranking. In the future, if Solana grows into a new generation of crypto giants, Stable Coin will remain an indispensable business territory and use case in this ecosystem.

At present, there are still many regulatory uncertainties in the Stable Coin market. Although USDT and USDC have been running stably for a long time, USDP is still unique in terms of compliance.

What’s more noteworthy is that although BUSD once gained a decent market share in the crypto market. However, the BUSD that is better known to the public and deployed on BNB Chain are not the same thing as the ETH Mainnet BUSD that has obtained regulatory approval. BUSD is only deployed on the Ethereum network by Paxos, and other networks are cross-chain interactions from third parties. Previously, Odaily Daily had a detailed interpretation of Paxos and BUSD in an old article.

As investors, it is difficult to assert which Stable Coin brand is more secure and reliable, but judging only from “paper data”, USDP is undoubtedly one of the top Stable Coin brands with better compliance.

For the first time, Paxos or regulatory licensing is expanding beyond the ETH Mainnet, which is both an outlook on the potential of USDP and a certain indication of the regulator’s attitude towards Solana. A reasonable guess is that if Solana still retains its “Compliance”, I am afraid that “ComplianceStable Coin” is a piece of the puzzle that cannot be bypassed.

How active are Solana’s Stable Coin use cases?

This expansion of Paxos’ business is seen as a milestone step for the company. Looking ahead, perhaps this move will trigger the next Stable Coin War, and may also have a profound impact on the entire Stable Coin market.

Currently, Solana’s Stable Coin market is quite active.

According to institutional crypto data platform Artemis, Solana’s daily Stable Coin transfer volume has grown by 600% since early December to $16.6 billion and is now one of the leading Blockchain networks for Stable Coin use cases.

Stable Coin transfer volume on the Solana network

Comparison of Stable Coin transfers across different networks

In terms of activity, Solana is undoubtedly one of the most important Stable Coin use cases. And with the compliance process of USDP, is Solana willing to consider it as an ecological Stable Coin that is “strongly bound” to itself?

Paxos has always been known for its “Compliance” and has launched the PayPal Stable Coin PYUSD. Commenting on Paxos’ business expansion, Raj Gokal, co-founder of Solana, said: "Paxos’ decision to introduce a Stable Coin offering to the Solana Blockchain will demonstrate how Solana’s high-performance network and low transaction fees can support regulated financial products. 」

Looking back at history, each generation of giants seems to have worked for a period of time to “strongly bind” Stable Coin supported by themselves. At present, Solana has risen and there is a wide demand for stable coins. Although there is still uncertainty about whether Solana can recover to the huge ecosystem that was called the “giant” of the previous cycle, the potential of this “compliance” narrative is enough to blow a ripple for the market pattern of stable coins.