Token extensions are "a big good" reason why PayPal taps Solana for stablecoin, says PayPal crypto chief
PayPal's choice of Solana was not solely based on speed and transaction capacity.
Key Takeaways
- PayPal has opted for Solana due to its efficient transaction capabilities and token extensions.
- Ethereum was deemed unsuitable for high-volume transactions.
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Solana’s token extensions were a key factor that drove the expansion of PYUSD, PayPal’s flagship stablecoin, to the Solana blockchain, said Jose Fernandez da Ponte, Senior VP of PayPal’s blockchain division, during the Solana BreakPoint event this week.
Initially issued on Ethereum, PYUSD later made its debut on Solana in a bid to offer users “a fast, easy, and inexpensive payment method.” The integration was expected to improve consumer and merchant experiences.
Da Ponte reiterated that during the Solana BreakPoint event, adding Solana’s token extensions made it a good fit for PayPal’s infrastructure.
“The first chain was Ethereum. We all know that Ethereum is not the best solution for payments when we were looking at the primitives,” said da Ponte when asked why PayPal decided to launch PYUSD on Solana.
“If you’re in retail payments, you need to do 1,000 transactions per second at least and you need to do a few things that differentiate a payment from a transaction…There is a ton in addition to that that you need to do,” he added.
Solana claims it can handle up to 65,000 transactions per second at deficient fees of just $0.0025. This performance stands in stark contrast to Ethereum, which can typically process only 15 transactions per second at fees ranging from $1 to $50.
In other words, transactions on Solana are often completed in a matter of seconds, while similar transfers on Ethereum can take several minutes. This efficiency has contributed to a major surge in Solana’s adoption for stablecoin transfers over the past year, according to a study from Artemis.
“So it was very easy when we were looking at where do we go next and what is the right chain for payments,” da Ponte noted. “It’s not only the speed, it’s not only the throughput that is important. We were talking about token extensions. Token extension was a big good driver for us.”
Launched earlier this year, Solana’s token extensions are a set of advanced features that enable developers to create tokens with unique features tailored to specific use cases. Developers can incorporate complex behaviors into their issued assets without compromising security or scalability.
The feature aims to unlock a variety of use cases across different sectors, including stablecoin, gaming, as well as financial services.
One of the first stablecoin issuers to adopt Solana’s token extensions was Paxos, which used the feature to issue their USDP stablecoin.
GMO Trust, the issuer of the GYEN stablecoin tied to the Japanese Yen and the ZUSD stablecoin pegged to the US dollar, has also incorporated the feature into its stablecoin offerings.
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