A Fresh Perspective on Yesterday’s PayPal PYUSD Token Launch

Yesterday, we saw a surprising launch of PayPal's stablecoin, PYUSD (link: https://www.reuters.com/technology/paypal-launches-stablecoin-crypto-push-2023-08-07), which has already caused a wide range of reactions across the crypto communities. Unfortunately, some of the early takes on this development have been somewhat misguided or misinformed:

Why did they use Ethereum for its infrastructure?

Ethereum, the network where PYUSD is issued, is the most decentralized, trustless settlement network today, boasting the highest liquidity and adoption rates. For any company looking to launch a stablecoin, Ethereum is a logical starting point, but it doesn't rule out a potential launch on a more efficient network down the line as we have seen with other stablecoins like USDT or USDC, which also run on Omni (BTC), Tron, BSC or Stellar to name a few.

Worth noting are the unique challenges associated with launching a regulated stablecoin on multiple networks, especially those that are not Ethereum. There are technical, regulatory, and user experience hurdles that must be overcome.

Is PYUSD CBDC-like and has the ability to freeze and seize assets?

PYUSD, like USDC, BUSD, and even USDT, does unfortunately possess the capability to "freeze & seize" assets. While I don’t agree with this feature, which resembles the horros of how CBDCs could look like and could be used to introduce a social credit system and deplatform dissidents (e.g. like PayPal tried in the past https://www.reuters.com/business/finance/paypal-says-it-never-intended-fine-users-misinformation-bloomberg-news-2022-10-10/), this is a standard requirement for centralized issuers like PayPal and shouldn’t be surprising. Nevertheless, every user should be aware of this features and do not mix it with decentralized stablecoins like DAI.

Why is the launch of PYUSD so significant?

Firstly, it's another step towards mainstream crypto acceptance. PayPal, as the world's largest fintech provider with 430m users, brings along a solid reputation and a user base that trusts its brand and products.

Furthermore, PayPal didn't casually decide to launch a stablecoin. The rollout of PYUSD is part of a well-thought-out strategy encompassing technology, regulation, and partnerships. PYUSD is set to enable millions of users to safely enter the world of Web3/crypto. Given that PYUSD is held bankruptcy-remote, it might be a safer option for risk-averse users over other stablecoins like USDT or even USDC.

Finally, with the right partnerships, PayPal can unlock millions of dollars in crypto settlement volume overnight. Its network of 29 million merchants and the ability to handle thousands of cross-border payments make it uniquely positioned to mak global payments at scale.

Following PayPal's initial foray into crypto assets in September 2021, which was a key driver of the last bull cycle, I believe PYUSD will lay essential groundwork for future crypto adoption.

Those are my thoughts at this point, but I'm eager to hear yours.

TL:DR: Using Ethereum is a matter of popularity and decentralization, PayPal has added a feature to seize and block transactions, PYUSD increases mainstream adoption potentially