What could affect the price of PYUSD?

PYUSD’s stability is facing some complex challenges and opportunities.

1. AI Funding Boost – PayPal is offering a $1 billion PYUSD incentive program with a 4.5% yield to support AI infrastructure, which could increase demand.
2. Expanding Across Blockchains – PYUSD is now available on Stellar (as of Dec 19) and already works on Ethereum, Solana, and Arbitrum, potentially increasing its use.
3. Regulatory Challenges – Delays in approval from New York’s financial regulator and new compliance rules pose risks.

In-Depth Look

1. AI Incentive Program (Positive Outlook)

What’s happening: PayPal and USDAI are launching a program that offers a 4.5% annual yield on PYUSD deposits starting January 2026. This program aims to raise $1 billion to fund AI infrastructure. Since PYUSD is backed by PayPal, a trusted company, this could encourage more people and institutions to hold PYUSD. (CoinMarketCal)
Why it matters: The attractive yield might draw in investors, reducing the available supply of PYUSD. If the funds successfully support AI projects, it could prove PYUSD’s value beyond just being a payment tool, leading to steady demand.

2. Growth in Cross-Chain Liquidity (Mixed Effects)

What’s happening: PYUSD has expanded to the Stellar blockchain as of December 19, adding to its presence on Ethereum, Solana, and Arbitrum. However, competitors like USD1 are also growing, with WLFI investing $120 million to promote its stablecoin. (CoinDesk)
Why it matters: Being available on multiple blockchains makes PYUSD more useful in decentralized finance (DeFi) platforms, such as Kamino, which holds $500 million in deposits. Stellar’s low-cost network could help PYUSD gain traction in remittances, but the market is competitive, and liquidity could become fragmented.

3. Regulatory Challenges (Potential Downside)

What’s happening: PYUSD has not yet received approval from the New York Department of Financial Services (NYDFS), limiting its availability in New York. Additionally, new SEC rules on crypto custody, announced December 18, make it harder for broker-dealers to adopt PYUSD. (CoinDesk)
Why it matters: These regulatory hurdles could slow down adoption by large institutions, especially if other stablecoins get approvals faster. Still, PayPal’s strong compliance systems may help PYUSD stay resilient over time.

Conclusion

PYUSD’s price stability depends on balancing the increased demand from yield incentives and blockchain expansion against regulatory and competitive pressures. The AI funding program and Stellar integration are promising short-term drivers, but PYUSD needs to keep pace with competitors like USD1. The big question: Can PYUSD’s cross-chain liquidity grow beyond $5 billion by the first quarter of 2026, securing its spot as a top-5 stablecoin?

What are people saying about PYUSD?

PayPal USD (PYUSD) is navigating growth across multiple blockchains and competing for the best returns, all while avoiding technical glitches. Here’s what’s happening now:

1. Expanding to multiple blockchains using LayerZero and Stellar
2. YouTube now pays U.S. creators in PYUSD
3. Launching a $1 billion incentive program to support AI-related loans
4. A major minting error of 300 trillion PYUSD sparks concerns about stability

Deep Dive

1. @StellarOrg: PYUSD expands to Stellar blockchain 🌐 positive

"PYUSD on Stellar allows businesses in over 170 countries to access funds instantly."
– @StellarOrg (841K followers · 9474 posts · 2025-07-12 18:41 UTC)
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What this means: This is good news for PYUSD. Stellar’s fast and low-cost network can help more merchants, especially in developing markets, start using PYUSD quickly.

2. @ULTIMAHORAENX: YouTube pays creators in PYUSD 🎥 neutral

"U.S. creators can now choose to get paid in PYUSD through PayPal’s existing system."
– @ULTIMAHORAENX (166K followers · 93K posts · 2025-12-12 10:05 UTC)
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What this means: This expands PYUSD’s use, but adoption depends on how comfortable creators are with cryptocurrency and how it affects their taxes.

3. @top7ico: $1 billion PYUSD yield program 💸 positive

"Starting January 2026, deposits earn 4.5% APY to fund AI infrastructure loans."
– @top7ico (150K followers · 15.4K posts · 2025-12-19 16:47 UTC)
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What this means: This could drive strong demand from AI companies needing financing for GPUs and other tech. However, regulators may keep a close eye on this.

4. @0xRexster: 300 trillion PYUSD minting error 🔥 negative

"Paxos accidentally created 300 trillion PYUSD but quickly burned it within minutes."
– @0xRexster (58.9K followers · 518 posts · 2025-10-16 05:50 UTC)
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What this means: This raises concerns about central control and technical risks, though the quick fix prevented any market damage.

Conclusion

The outlook for PYUSD is mixed. On one hand, it’s aggressively expanding—now on nine blockchains and integrated with YouTube payouts. On the other, operational risks like the minting error highlight challenges. PYUSD’s regulated status and PayPal’s large user base (434 million) offer stability, but competitors like RLUSD are gaining in liquidity. Keep an eye on the $1 billion incentive program launching in early 2026. If AI companies widely adopt PYUSD, it could solidify its role as a stablecoin that bridges traditional finance (Web2) and crypto.

What is the latest news about PYUSD?

PayPal’s PayPal USD (PYUSD) is making moves into artificial intelligence (AI) and expanding across different blockchain networks, while also facing new competitors. Here’s the latest update:

1. AI Infrastructure Funding (Dec 18, 2025) – PYUSD is supporting $1 billion for AI projects by offering a 4.5% annual yield program.
2. Stargate Integration (Dec 19, 2025) – PYUSD0 launched on the Stellar blockchain to improve cross-chain transactions.
3. Stablecoin Competition (Dec 18, 2025) – World Liberty Financial’s USD1 stablecoin is challenging PYUSD with a $120 million treasury boost.

Deep Dive

1. AI Infrastructure Funding (December 18, 2025)

Overview:
PayPal announced that PYUSD will help fund AI infrastructure through a project called USD.AI. They’re offering a 4.5% annual percentage yield (APY) on deposits up to $1 billion. This is a shift from just using PYUSD for payments to directly supporting technology development by using PYUSD’s liquidity to finance AI computing resources.

What this means:
This is a positive development for PYUSD because it broadens how the stablecoin can be used, attracting larger investors who want steady returns. However, the success of this initiative depends on how well USD.AI performs and how clear the regulations are around stablecoins like PYUSD.
(CoinMarketCap)

2. Stargate Integration (December 19, 2025)

Overview:
PYUSD has launched a version called PYUSD0 on the Stellar blockchain through Stargate Finance. This allows users to move PYUSD between different blockchains without needing permission. The technology used, LayerZero, helps make transactions faster and cheaper.

What this means:
This is somewhat positive for PYUSD. It improves liquidity by making PYUSD available on multiple blockchains—Ethereum, Solana, Stellar, and TRON. However, how widely it will be adopted depends on whether users in decentralized finance (DeFi) and money transfer services start using it.
(CoinMarketCal Bot)

3. Stablecoin Competition (December 18, 2025)

Overview:
World Liberty Financial’s USD1 stablecoin is trying to catch up with PYUSD by allocating $120 million to its treasury. PYUSD currently leads with a market value of $3.86 billion.

What this means:
This could create downward pressure on PYUSD if USD1 gains popularity in both decentralized and centralized finance partnerships. Still, PayPal’s strong brand and compliance with regulations give PYUSD an advantage when it comes to trust from large institutions.
(CoinMarketCap)

Conclusion

PYUSD is expanding into AI funding and improving its ability to work across multiple blockchains, all while defending its position against new competitors. The big question for 2026 is whether PayPal’s reputation and attractive yield programs will help PYUSD stay ahead despite competition and regulatory challenges.

What is expected in the development of PYUSD?

PayPal USD (PYUSD) is moving forward with key expansions and new partnerships.

1. Cross-Chain Expansion (Q1 2026) – PYUSD will connect with Stellar, Aptos, and Tron blockchains to work across multiple networks.
2. AI Infrastructure Funding (January 2026) – PYUSD will support AI projects through a partnership with USDAI.
3. Regulatory Compliance Upgrades (2026) – PYUSD is aligning with the GENIUS Act to meet U.S. stablecoin regulations.

Deep Dive

1. Cross-Chain Expansion (Q1 2026)

Overview: PYUSD plans to expand beyond its current blockchains—Ethereum, Solana, and Arbitrum—to include Stellar, Aptos, and Tron. This will use LayerZero’s technology to allow PYUSD to move smoothly between these networks (Stellar).

What this means:

• Positive: This makes PYUSD more useful for global payments and decentralized finance (DeFi), which could lead to more people using it.
• Potential challenge: Managing PYUSD across many blockchains might split up its liquidity if demand doesn’t grow enough.

2. AI Infrastructure Funding (January 2026)

Overview: PayPal and USDAI will offer a program where PYUSD holders can earn a 4.5% return by depositing their tokens. The funds will be used to support AI startups through on-chain loans, aiming to raise up to $1 billion (USD.AI).

What this means:

• Positive: This creates a new way to use PYUSD beyond payments, attracting bigger investors interested in AI.
• Uncertain: The program’s success depends on growth in the AI industry and clear rules for crypto-backed loans.

3. Regulatory Compliance Upgrades (2026)

Overview: PYUSD is preparing to meet the new requirements of the GENIUS Act, which calls for clear reporting of reserves and strong operational controls for U.S. stablecoins. Paxos, the company behind PYUSD, recently became regulated by the Office of the Comptroller of the Currency (OCC), showing it’s ready for these changes (Paxos).

What this means:

• Positive: PYUSD could become a trusted and fully compliant alternative to other stablecoins like USDT and USDC in regulated markets.
• Downside: The cost of meeting these regulations might slow down innovation compared to competitors outside the U.S.

Conclusion

PYUSD’s plan focuses on expanding its use across multiple blockchains, supporting new technology sectors like AI, and strengthening its compliance with U.S. regulations. These moves aim to position PYUSD as a reliable link between traditional finance and the evolving world of Web3.

Will PYUSD’s focus on compliance help it lead the market as regulations tighten?

What updates are there in the PYUSD code base?

The PayPal USD (PYUSD) codebase has recently been updated with important security improvements and expanded to work across multiple blockchain networks.

1. Multi-Chain Expansion with LayerZero (December 19, 2025) – PYUSD0 was launched as a permissionless token that operates across 9 different blockchain networks.
2. Security Audits for Version 2 (2025) – Independent firms Zellic and Trail of Bits reviewed and confirmed the safety of the updated protocol.
3. Gasless Transactions Support (EIP-3009/2612) – New features allow users to make transactions without paying gas fees directly, including batch transfers and signature-based approvals.

Deep Dive

1. Multi-Chain Expansion with LayerZero (December 19, 2025)

Overview: PYUSD introduced a new token called PYUSD0, which can move freely across multiple blockchains like Tron, Avalanche, and Aptos using LayerZero’s Stargate Hydra technology. This means users can transfer PYUSD0 between these networks without needing to manually use bridges or exchanges.

This upgrade uses LayerZero’s OFT (Omnichain Fungible Token) standard, ensuring PYUSD and PYUSD0 remain equal in value and interchangeable. Developers can now add PYUSD support to decentralized apps (dApps) on newer networks such as Sei and Berachain, which offer faster transaction finality (about 5 seconds) and lower fees.

What this means: This is a positive development for PYUSD because it broadens its use in decentralized finance (DeFi) and international payments, while still following regulatory rules. (Source)

2. Security Audits for Version 2 (2025)

Overview: Independent security firms Zellic and Trail of Bits conducted thorough reviews of PYUSD’s updated smart contracts. They confirmed that the new supply controls and asset-freezing features are secure.

The version 2 contract added limits on how quickly new tokens can be minted and improved role-based permissions, such as the ASSET_PROTECTION_ROLE that helps manage asset freezes. No major security issues were found, though auditors suggested better input checks for batch operations.

What this means: This update doesn’t add new features but strengthens PYUSD’s security, which helps build trust with institutions and regulators. (Source)

3. Gasless Transactions Support (EIP-3009/2612)

Overview: PYUSD now supports Ethereum Improvement Proposals (EIPs) 3009 and 2612, which allow users to approve transactions off-chain using digital signatures. This means users don’t have to pay gas fees directly for every transaction.

With the new transferFromBatch function, apps can bundle multiple transfers into a single transaction, reducing fees by about 40% for users who make many transactions frequently.

What this means: This is good news for PYUSD users, especially merchants and DeFi platforms, because it makes small, frequent payments more affordable and user-friendly. (Source)

Conclusion

PYUSD’s recent updates focus on making the token work smoothly across multiple blockchains, improving security, and enhancing the user experience with gasless transactions. While expanding across different networks could increase adoption, it also raises questions about how regulators will handle PYUSD’s growing presence in multiple jurisdictions.