paypal $PYUSD The stablecoin’s market cap exceeded $4 billion this month, and supply on Layer 2 Arbitrum One has increased to the point where it ranks as the fourth largest stablecoin in the network.
Arbitrum currently has assets worth $220 million, according to data compiled by consulting firm Entropy Advisors. $PYUSD Here’s what’s circulating on the network: $USDAIUSDC and USDT. DefiLlama data is $PYUSD The supply value at Arbitrum is $256.6 million.
Stablecoin deployed on Arbitrum One. Source: Dune Analytics
As an Entropy Advisors analyst explained in a Feb. 16 X post: $PYUSDThe increase in Arbitrum appears to be related to a partnership announced in mid-December between PayPal and USDai lead developer Permian Labs ($USDAI).
Based on the agreement, $PYUSD Added as backing for reserve assets $USDAI And the protocol’s payments and liquidity assets, primarily based on Arbitrumand, are tied to funding AI infrastructure such as GPUs and data centers.
According to the announcement, up to $1 billion $PYUSD Deposits to USDai earn 4.5% APY as part of a 1-year incentive program.
“With this integration, $USDAILoans can be issued in the following ways: $PYUSD You can pay directly to your PayPal account. Borrowers can pay for GPUs, data center costs, rentals, and subscriptions using a single dollar-based rail. ” $USDAI said in a post from December X.
After integration, data from DefiLlama shows that almost all $PYUSDThe supply of on Arbitrum is expanded within USDai. $PYUSD It currently accounts for over 43% of all token deposits on the protocol, second only to WrappedM by M0 (WM). $USDAIis the underlying asset and accounts for over 56% of TVL.
Token breakdown $USDAI. Source: Defilama
but, $USDAIIts own document states that “incentives will be used early to ensure liquidity, but are not end-state yield sources,” implying that while stablecoins are primarily being introduced to support payments in the early stages, the protocol is intended to move to GPU- and AI-backed lending as the primary source of yield and collateral.
Arbitrum One currently holds the largest amount of Ethereum L2 by total amount secured, with $16.82 billion, according to L2Beat data.
