Even though Paypal’s new USD stablecoin has been deployed on the Ethereum blockchain, it does not mean it’s decentralized. Several people online have dug into the code of the coin’s smart contract and found some alarming things such as PayPal holding the ability to reverse transactions, freeze user assets, coins can be freely minted/ burned by the admin (aka, PayPal themselves).
The new PayPal USD stablecoin has an “assetprotection” role which can wipe your balance in two transactions (first ‘freeze’, then ‘wipeFrozenAddress’
In smart contract security, this is called a “centralization attack vector”
And based on the PayPal USD terms of service, you have to access the stablecoin through your PayPal account— which means it is full KYC and your held tokens are UNDER PayPal’s custody. Yes, that means they own your coins.
Now, it is common knowledge that other stablecoins such as USDC and USDT, have similar mechanics— except we all know how PayPal can be. They are notorious for freezing user assets in the past, seizing millions of dollars and have faced class action lawsuits for such.
Nobody in the defi world should be taking Paypal’s stablecoin seriously. You can’t even use it as a trading pair or provide liquidity with it.
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