In a significant milestone, PayPal’s stablecoin, PYUSD, has soared past the $1 billion mark in market capitalization, according to data. This achievement, realized in collaboration with the fintech firm Paxos, marks a substantial doubling of the token’s supply since June.

Despite the broader cryptocurrency markets experiencing a summer lull, PYUSD has witnessed a remarkable uptick in user engagement. The number of active wallet addresses skyrocketed to over 25,000 in July, up from just 9,400 in May, as noted by Visa’s stablecoin dashboard, developed alongside Alluvium.

PayPal’s foray into the stablecoin arena was heralded as a pivotal moment for the cryptocurrency industry, with expectations that PYUSD could rival established stablecoins like Circle’s USDC and Tether’s USDT. However, initial excitement waned as PYUSD’s growth on the Ethereum network faltered. The landscape shifted dramatically when PYUSD expanded to the Solana network at the end of May.

In just three months, PYUSD’s supply on Solana surged to $650 million, surpassing its presence on Ethereum. Over the past month, the supply on Solana has grown by an astonishing 171%, closing in on Tether’s USDT on the same network, as per DefiLlama’s data.

Also, read – DNA Computing Breakthrough Paves the Way for Living Blockchain Networks

The rapid growth of PYUSD on Solana can be attributed to strategic incentives, according to Tom Wan, a business development and strategy associate at 21.co, a digital asset investment firm. He noted that integrations with decentralized finance (DeFi) protocols have played a crucial role in this expansion.

Solana-based protocols such as Kamino, Drift, and Marginfi have rolled out enhanced rewards for PYUSD deposits, offering double-digit annualized returns to token holders. Additionally, Anchorage Digital, a crypto custody firm, recently introduced incentives for PYUSD deposits aimed at institutional investors.

However, there are lingering concerns about the sustainability of PYUSD’s growth once these incentives are reduced or removed. David Shuttleworth, a partner at the research firm Anagram, cautioned that while these incentives are effective in driving short-term adoption, they are not intended to be a long-term solution. The primary goal is to increase PYUSD’s circulation and encourage user activity within the Solana ecosystem, particularly among new participants.

As PYUSD continues to gain traction, the coming months will reveal whether its growth is driven by lasting adoption or temporary incentives.