‘Ethereum Not The Best Solution,’ PayPal Crypto Head Explains Solana Choice for PYUSD

Key Takeaways

• PayPal’s head of blockchain said Ethereum is not fit for their needs. 
• Jose Fernandez da Ponte explained why PayPal moved PYUSD to Solana.
• PYUSD’s migration seems to have yielded great results.

PayPal’s Head of Blockchain, Crypto, and Digital Currencies (BCDC) unit, Jose Fernandez da Ponte, has expressed skepticism about Ethereum’s ability to support a payment infrastructure, citing its limitations in transaction processing speed.

Speaking at the Solana Breakpoint event , Fernandez emphasized the need for a payment network to handle at least 1000 transactions per second, a benchmark he believes Ethereum falls short of.

It’s also why Solana was ultimately chosen as the preferred platform for dollar-backed stablecoin PYUSD .

Solana Tops Ethereum for Payments, Says PayPal Blockchain Head

Fernandez’s comments on Ethereum surprised its proponents but simultaneously revealed a harsh truth.

Ethereum’s struggles with scalability have been well-documented, and for companies like PayPal, speed is key.

“We all know that Ethereum is not the best solution for payments,” PayPal’s BCDC head said. “When looking at primitives as a payment provider, you must do at least 1000 transactions per second.”

After initially opting for Ethereum , PayPal’s crypto team quickly realized it wasn’t the right fit.

Instead, they sought out a blockchain that could handle high transaction volumes and provide an ecosystem to facilitate seamless value transfer between wallets. Solana, with its token extension capabilities and rapid processing power, proved an attractive alternative.

“There are many things you need to do regarding crypto payments,” Fernandez explained.

“There is transaction confidentiality and managing charges for transactions. Thus, Solana was an easy choice when we were looking for the next chain, especially because of the Token Extension capabilities,” he added.

What are Token Extensions?

As Fernandez explained, Token Extensions were a key factor in PayPal’s decision to migrate its PYUSD stablecoin to Solana.

Token extensions enable new business standards and use cases, providing native support for enterprise-grade applications. By leveraging Token Extensions, PayPal aimed to make its stablecoin more accessible.

PYUSD’s decision to move to Solana from Ethereum has certainly paid off.

The stablecoin’s market cap on Solana soared above $650 million within months of launch. This rapid growth has brought PYUSD closer to industry leader Tether’s USDT, which boasts a market capitalization of $686 million on Solana. 

Stablecoin share on Solana. Source: Dune

Ethereum’s Scalability Woes Continue

As the pioneering force behind decentralized infrastructure solutions, Ethereum has long been hailed as a trailblazer in the blockchain space.

Its technology has enabled countless projects to launch their financial solutions, cementing its status as the second-largest blockchain.

However, one persistent Achilles’ heel has plagued Ethereum since its inception: scalability.

Despite a major technological overhaul in 2021, which saw the network shift from proof-of-work to proof-of-stake consensus , the scalability issue remains unresolved.

As a result, in recent years, Solana has emerged as a credible alternative to Ethereum, offering a similar blockchain infrastructure with substantial processing speed advantages.

While Solana has faced its own network issues , including congestion and blackouts , the blockchain has become a hotbed of developer activity.

Some have long touted Solana as an “Ethereum killer,” a notion often dismissed as hyperbole .

However, the recent endorsement by traditional financial titans like PayPal has lent credence to the claim.