PayPal to Launch U.S. Dollar-Backed Stablecoin on Stellar Blockchain

Introduction to PayPal USD (PYUSD)

On June 11, PayPal revealed its intention to introduce PayPal USD (PYUSD), a stablecoin pegged to the U.S. dollar, on the Stellar blockchain, pending approval from the New York State Department of Financial Services. This initiative aims to broaden the availability of PYUSD, which is currently accessible on Ethereum and Solana.

Stellar Blockchain: A Strategic Choice

PayPal has characterized Stellar as an ideal blockchain for facilitating low-cost and rapid transactions, emphasizing its practical applications in the real world. By integrating with Stellar, PayPal seeks to enhance the usability of PYUSD for various financial activities, including payments and cross-border transactions. This collaboration is anticipated to expand daily payment options and improve access to financial services like working capital and small business loans, areas where Stellar has already established a presence.

Global Reach and Infrastructure

The announcement highlighted Stellar’s extensive global infrastructure, which includes a wide array of on- and off-ramps, local payment systems, and digital wallets. This infrastructure could enable PYUSD to reach users in over 170 countries. PayPal also pointed out the potential for improved liquidity and settlement through PayFi, a new digital financing mechanism that would allow businesses to access real-time capital disbursed in PYUSD via the Stellar network.

Expert Insights on the Partnership

May Zabaneh, PayPal’s VP for digital currencies, expressed that this partnership would significantly advance blockchain utilization in cross-border payments. Denelle Dixon, CEO of the Stellar Development Foundation, noted that this collaboration could facilitate practical applications of stablecoins in emerging markets and for small businesses worldwide.

Details on PYUSD

PYUSD is issued by Paxos Trust Company and is fully backed by cash and cash-equivalent reserves, maintaining a fixed redemption value of $1.00 per token.

Technical Analysis of Stellar’s XLM Token

Price Movements and Volatility

Stellar’s XLM token experienced notable price fluctuations during a 24-hour trading window from July 11 at 17:00 UTC to July 12 at 16:00 UTC. The token traded within a range of $0.071, showcasing approximately 20.59% volatility, with a session low of $0.345 and a high of $0.416, as per CoinDesk Research’s technical analysis.

Significant Trading Activity

The most significant trading activity occurred early on July 12 at 01:00 UTC, when XLM surged from $0.354 to $0.393, driven by a substantial trading volume of 551.38 million units, far exceeding the 24-hour average of 234.19 million. This movement established technical support around the $0.354 price point.

Continued Upward Momentum

The upward trend continued until July 12 at 11:00 UTC, reaching a peak of $0.416 before facing resistance in the $0.400-$0.403 range, where institutional profit-taking limited further gains.

Final Trading Hour Insights

In the last hour of trading on July 12, from 15:47 UTC to 16:46 UTC, XLM demonstrated renewed strength, advancing by 3.89% from $0.37 to $0.39, extending the session’s positive momentum. The most significant price movement occurred between 16:03 and 16:08 UTC, when shares rose from $0.374 to $0.385 on elevated trading volumes, establishing support around $0.385-$0.387.

Conclusion

This partnership between PayPal and Stellar marks a significant step in the evolution of digital currencies, particularly in enhancing the accessibility and utility of stablecoins in global markets. As the regulatory approval process unfolds, the implications for cross-border payments and financial services could be transformative.

Disclaimer

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Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.