The latest entrant into the realm of Ethereum-based stablecoins, Paypal USD (PYUSD), has been creating significant buzz within the crypto community. While some regard this as a landmark moment fueling Ethereum’s journey towards becoming the internet’s monetary layer, others caution about the erosion of decentralization and personal asset control.
PYUSD, which operates on Ethereum, was introduced by Paxos Trust Co. on August 7 and is expected to hit the U.S market soon. Since Ethereum’s present daily active user number is around 300,000-400,000, PYUSD’s activation across Paypal’s 430 million active accounts would mean a theoretical 5% of the world’s population introduced to Ethereum. This could be seminal in bringing Ethereum into mainstream use.
Furthermore, CEO and co-founder of Gnosis, Martin Koppelmann, believes the launch of PYUSD on Ethereum’s base layer could foster Ethereum layer-2s interaction with PYUSD. Lawmakers too have welcomed this as a putative reinforcement to the conventional payment method. Patrick McHenry, Chair of the United States House Committee on Financial Services, hailed PYUSD as a harbinger of a 21st-century payment system.
On the other end of the spectrum, the scholarly community has voiced concerns. Several auditors have identified ‘freezefunds’ and ‘wipefrozenfunds’ functions in PYUSD’s smart contract, which they claim could lead to centralization attack. Chris Blec, a cryptocurrency researcher, raised this concern further, believing that Paypal will employ such controversial functionalities whenever necessary.
Digital asset lawyer Sarah Hodder likened PYUSD to a censorship-enabled central bank digital currency, where Paypal could alter the PYUSD’s smart contract at any time. Consequent to Paypal’s contested policy that threatened users with fines for “misinformation,” a serious concern for personal asset control looms.
Underlining PYUSD’s centralization, blockchain engineer Patrick Collins argued that while PYUSD could have been “epic,” the engineering choices were disappointing. Collins criticized Paypal’s selection of an outdated Solidity version and highlighted the contract’s upgradeability and gas inefficiency. This doesn’t necessarily mean that PYUSD won’t be successful, but it will stir Ethereum users to decide whether they wish to use it or not.
While this ongoing buzz lingers, PYUSD’s roll-out is anticipated in a few weeks. It remains to be seen whether this Ethereum-based initiative from Paypal proves to be revolutionary, pushing forth adoption, or a step towards increased centralization and reduced asset control. Ultimately, the outcome will reflect upon Ethereum’s market value, which currently hovers around $1,825.
Source: Cointelegraph
