At the time of writing, the official Paypal stablecoin PYUSD smart contract has been unveiled, and as it stands, the maximum aggregate supply amounts to 26,905,005.66 PYUSD. In spite of the existence of more than 26 million Paypal stablecoins, the contract continues to retain a substantial 92.91% of this supply. Concurrently, the Paxos Treasury wields control over 7.08% of all the PYUSD in circulation.
Paypal’s PYUSD: Unpacking the Smart Contract, ‘Freeze’ Function, and What It Means for Centralized Stablecoins
Over a day has passed since Paypal and Paxos announced the new stablecoin PYUSD and unveiled the official Github code repository and smart contract address. Before the smart contract’s publication, several bogus PYUSD tokens were created and introduced to decentralized exchange (dex) platforms. Currently, the token contract reveals roughly 26,905,005.66 PYUSD in circulation across eight wallets.
The leading two holders possess 99.99% of the supply, indicating that PYUSD exists but has not yet been distributed. The initial mint occurred on August 3, 2023, five days prior, and PYUSD has experienced a total of 175 transfers, presumably internal tests. One topic of conversation is Paypal’s contract containing a “freeze” option, which has become a trending subject on social media platforms such as X (formerly Twitter).
The smart contract features freeze and seizure (wipe) capabilities. The “freeze” function permits an appointed asset protection role to freeze a specific address; upon freezing, the address cannot transfer or receive tokens according to checks in transfer-related functions. The “unfreeze” function enables an assigned asset protection role to unfreeze a particular address, lifting any freeze-imposed limitations.
A designated asset protection role can utilize the “wipeFrozenAddress” function to clear the balance of a frozen address, effectively confiscating its tokens. The tokens are deducted from the total supply while setting the frozen address balance to zero. Although freezing features are currently under discussion, other well-known stablecoins like USDT, USDC, and USDP also possess address-freezing capabilities.
Many dollar-pegged token providers argue that these functionalities assist in regulatory compliance management or responding to suspicious activities. Additionally, the PYUSD contract employs an outdated Solidity version 0.4.24. Like most popular stablecoin assets presently, PYUSD’s contract can raise or lower the total token supply. Moreover, the PYUSD contract owner can also pause/unpause it, blocking transfers and approvals during a halted state.
The PYUSD smart contract shares similarities with today’s notable centralized stablecoin assets in terms of control and minting capabilities. It shouldn’t be confused with decentralized stablecoin assets or censorship-resistant cryptocurrencies like bitcoin (BTC). Paypal enjoys a substantial position in the financial world, and while PYUSD doesn’t pose a significant threat to decentralized and permissionless crypto assets, it could challenge centralized and regulated stablecoins.
How do you perceive the introduction of Paypal’s PYUSD and its unique ‘freeze’ option? Share your thoughts and opinions about this subject in the comments section below.