Aave, a decentralized platform for crypto borrowing and lending, is considering adding PayPal’s PYUSD stablecoin to its Ethereum pool. The proposal for this integration was put forward in December and subjected to a community vote from Jan 8 to Jan 11.

According to Snapshot data, an overwhelming 99.99% of Aave token holders voted in favor of incorporating PayPal’s PYUSD stablecoin. Over 460,000 Aave community members supported the onboarding of this stablecoin.

Proposal Receives 99.98% Support from Participants

In an ongoing governance vote, an overwhelming 99.98% of participating AAVE token holders support the integration of PYUSD into AAVE’s Ethereum-based pool. The proposal, introduced by Trident Digital on December 18 as a “temperature check,” is set to conclude later on Thursday. This move comes after decentralized exchange Curve’s decision in December to host PYUSD.

PYUSD, a dollar-pegged stablecoin established in August, has quickly gained traction, boasting a market capitalization of $289 million, equivalent to 0.3% of industry leader Tether’s $94 billion. Aave, a decentralized finance protocol facilitating lending and borrowing without intermediaries, is currently the world’s third-largest DeFi solution, with almost $5 billion worth of crypto assets locked into its protocol, according to DappRadar.

Creating Synergy with PayPal’s PYUSD

Trident’s proposal emphasizes that integrating PYUSD into AAVE will foster synergies with PayPal’s stablecoin and enhance the relationship between PYUSD and AAVE’s decentralized multi-collateral stablecoin, GHO. Trident, which incentivizes the PYUSD/USDC liquidity pool on Curve, has committed to contributing $5 million to $10 million in liquidity for PYUSD on AAVE from day one, as stated in the governance proposal chat.

PYUSD by PayPal: Navigating Growth and Challenges

PayPal’s PYUSD stablecoin aims for a versatile role, marketed for payments within the PayPal app and crypto trading. Despite being the twelfth-largest stablecoin by market cap with a 63% growth in circulation over the past month, PYUSD faces stiff competition, notably from USDT, which dominates the stablecoin market. Its 24-hour trading volume lags behind peers, indicating challenges in gaining traction. The partnership between Paxos and Trident Digital seeks to bolster PYUSD’s liquidity, evident in its recent activation on Curve and the ongoing Aave proposal. While PYUSD is navigating a competitive landscape, strategic collaborations and gradual growth suggest it could find a unique place in the stablecoin ecosystem.

Conclusion

The ongoing governance vote within Aave strongly indicates that the community is overwhelmingly in favor of integrating PayPal’s PYUSD stablecoin into Aave’s Ethereum-based pool. This move follows the footsteps of other platforms like Curve, which decided to host PYUSD in December. The proposal highlights the potential synergies between PYUSD and Aave’s decentralized multi-collateral stablecoin, GHO, and aims to strengthen the relationship between the two. With PYUSD’s growing market capitalization and Aave’s significant position as the third-largest DeFi solution globally, this integration could further solidify Aave’s position in the decentralized finance space. Trident Digital, the proponent of the proposal, plans to contribute substantial liquidity to PYUSD on Aave, signaling confidence and commitment to the successful implementation of this integration.