In a bid to gain a competitive edge in the intensifying stablecoin market, PayPal is introducing an attractive 3.7% annual yield for its stablecoin PYUSD, hoping to drive wider user adoption.

As the stablecoin space becomes increasingly crowded, PayPal is stepping up its game. According to Bloomberg, starting this summer, PayPal will offer a 3.7% annual percentage yield (APY) on PayPal USD (PYUSD) balances, aiming to boost usage and expand its user base.

Daily Compounding, Monthly Payouts — All in PYUSD

This initiative will first roll out to U.S. users. PYUSD holders will receive daily compounding rewards, which will be paid out monthly in PYUSD. Simply holding the stablecoin in a PayPal or Venmo wallet will automatically start earning users interest.

Better yet, users can still spend PYUSD via PayPal Checkout, send it to other users, or convert it to traditional U.S. dollars, offering full flexibility.

PayPal Executive: “We’re Only Halfway Through Our 10-Year Journey”

Jose Fernandez da Ponte, Head of Blockchain and Digital Currencies at PayPal, commented:

“We’re only halfway through a 10-year journey.”

His vision is to create a faster, cheaper payment system, with stablecoins as a cornerstone of that ecosystem.

PayPal CEO Alex Chriss echoed this sentiment, stating that stablecoins could fundamentally transform the payments economy, reducing costs, accelerating transactions, and improving user experience.

Backed by a Big Brand, But Still Small Market Share

Despite being supported by a global brand, PYUSD’s market share remains modest. According to RWA.xyz, PYUSD currently has a circulating market cap of around $868 million — a far cry from Tether’s $143 billion.

It’s worth noting that PYUSD is issued by Paxos Trust, a regulated financial institution, and is backed by U.S. Treasury assets, emphasizing both stability and regulatory compliance.

Expanding Crypto Offerings: LINK and SOL Now Supported

This PYUSD push comes amid broader crypto expansion efforts by PayPal. Earlier this month, the company added support for more cryptocurrencies, including Chainlink (LINK) and Solana (SOL), continuing to build out its digital asset ecosystem.

Are We Entering the Era of Stablecoin Yields?

PayPal’s 3.7% APY offering on stablecoins undoubtedly provides a new option for crypto investors. In an environment where traditional bank interest rates remain underwhelming, such low-risk digital asset yield programs may attract investors seeking stable returns.