PayPal dives into crypto and recently announced support for select stablecoin transactions on its platform. Users will soon be able to buy, sell, hold and checkout with these stablecoins seamlessly.
This is a major push into crypto from the payments giant as it looks to capitalize on blockchain adoption. Let’s take a closer look at what this means.
What Are Stablecoins?
Unlike volatile cryptocurrencies like Bitcoin, stablecoins are designed to have a stable value pegged to an external asset. Common stablecoin pegs include:
- Fiat currency like USD
- Commodities like gold
- Other crypto assets
By stabilizing the price, stablecoins can be reliably used as a medium of exchange and store of value.
PayPal Adding Support for 4 Stablecoins
PayPal announced it will support 4 major stablecoins:
All 4 stablecoins maintain a 1:1 peg to the US dollar, held in reserve.
Users will be able to buy, sell, hold these assets, and use them for payments with PayPal merchants in a seamless integrated experience without blockchain transaction fees.
PayPal Leveraging Its Scale
With over 350 million active user accounts, PayPal has massive reach.
This stablecoin support removes a key barrier to mainstream crypto adoption – volatility. It provides an easy entrypoint into decentralized payments.
As a trusted household name, PayPal’s endorsement could mark a tipping point for stablecoin legitimacy.
Driving Mainstream Adoption
PayPal adding stablecoins is a huge step forward in mainstream acceptance.
Other payment apps like Venmo, CashApp have also started crypto services. But PayPal’s ubiquitous presence gives it unparalleled reach.
If a small percentage of PayPal’s users adopt stablecoins, it can rapidly accelerate everyday blockchain usage.
PayPal is strategically embracing the transition to Web3. This stablecoin support maximizes their role in the new financial system while maintaining user trust.
Impact on the Crypto Industry
The crypto market surged on news of PayPal’s stablecoin announcement. Incumbent endorsements lend further credibility.
It validates crypto as a payments technology. Other payment and fintech providers will likely accelerate their crypto integrations now.
Consumer adoption at scale is crucial for maturation. PayPal’s reach can provide the ultimate litmus test for crypto’s readiness.
If successful, PayPal’s move may prompt integration of less stable assets. For now, stablecoins offer the right balance of security and innovation.
This is an exciting milestone for crypto. With PayPal embracing stablecoins, accelerated mainstream adoption could soon follow.
More about PYUSD Smart Contracts
Here you can find the code of the smart contracts https://etherscan.deth.net/address/0xe17b8adf8e46b15f3f9ab4bb9e3b6e31db09126e#code
And we are going to tell you the main points and what is being used after reviewing it:
SafeMath Library
This is a library for performing safe mathematical operations, ensuring no overflows or underflows occur.
PYUSDImplementation Contract:
- Modifiers:
onlyOwner: Ensures that only the owner can call a function.whenNotPaused: Ensures that the function can only be called when the contract is not paused.onlyAssetProtectionRole: Ensures that only the designated asset protection role can call a function.onlySupplyController: Ensures that only the supply controller can call a function.
- Events: The contract emits various events to log significant actions like transfers, approvals, ownership changes, pausing/unpausing, address freezing/unfreezing, supply changes, and delegated transfers.
- EIP712 Integration: The contract integrates EIP712 for creating typed, structured data to be signed, which is used in the delegated transfer functionality.
Additional Notes
- The contract has a mechanism to protect against replay attacks in the delegated transfer functionality using sequence numbers.
- There’s a mechanism for the owner to reclaim any PYUSD tokens accidentally sent to the contract.
- Asset protection functionality allows for freezing and unfreezing of addresses, as well as wiping the balances of frozen addresses.
This contract seems to be designed for a stablecoin or a token representing a fiat currency (USD in this case), given its name and the presence of asset protection and supply control functionalities. The delegated transfer functionality suggests an attempt to mitigate Ethereum’s gas fee issues by allowing users to delegate transfers to a third party who pays the gas fees.
Warnings
The statement “Asset protection functionality allows for freezing and unfreezing of addresses, as well as wiping the balances of frozen addresses” refers to a mechanism where certain entities or administrators have the power to control, restrict, or modify the assets held in specific addresses on a blockchain or digital ledger. The PYUSD stablecoin possesses an “assetProtection” role. This role allows for a two-step procedure – first freezing and then wiping the balance of an address. Such functionality is termed a “centralization attack vector” in smart contract security speech, emphasizing centralized control over the coin’s usage.
Here’s a breakdown of the statement and its implications in relation to the fundamental principles of blockchain:
Centralization vs. Decentralization
One of the core principles of blockchain is decentralization, meaning no single entity has control over the entire network. The ability to freeze, unfreeze, or wipe balances indicates a centralized control mechanism. This goes against the principle of decentralization, as it gives certain entities the power to exert control over individual assets.
Immutability
Blockchain is often praised for its immutability, meaning once a transaction is recorded, it cannot be altered or deleted. The ability to wipe balances challenges this principle, as it allows for the alteration of the historical record.
Censorship Resistance
A key feature of many blockchains is censorship resistance, ensuring that all transactions are treated equally and cannot be censored by any central authority. Freezing addresses can be seen as a form of censorship, as it prevents certain addresses from participating in the network.
Trust
One of the reasons blockchain has gained popularity is because of its trustless nature. Users don’t need to trust a central authority; they trust the code and the decentralized consensus mechanism. If an entity has the power to freeze assets or wipe balances, it requires users to place trust in that entity not to misuse its power.
Use Cases and Trade-offs
Not all blockchains or digital ledgers strive for full decentralization or immutability. Designers create some for specific use cases that require central control, like private or consortium blockchains that businesses use. In these situations, developers implement asset protection functionalities to meet regulatory requirements or to guard against fraudulent activities.
In conclusion, while the ability to freeze, unfreeze, and wipe balances can offer certain advantages in specific scenarios, it does challenge some of the fundamental principles of blockchain, particularly decentralization, immutability, and censorship resistance. It’s essential to understand the trade-offs and the specific goals of a blockchain or digital ledger when evaluating such features.
Conclusion
Turn your ideas into reality with Infuy’s expertise. Our talented developers have years of experience innovating with applications. They stay on top of emerging technologies like blockchain or AI so we can build the most powerful and scalable solutions for your business.
We believe collaboration is key – your vision combined with our technical experience will produce amazing results. Tell us about your project idea and we could take it to the next level. We’ll jointly craft a development roadmap to make it happen.
Related Posts:
Posted in Blockchain, Solidity
