In a groundbreaking move, PayPal’s regulated USD stablecoin, PYUSD, has ventured into the decentralized finance (DeFi) sector through an innovative integration with Backed’s tokenized real-world assets (RWAs) on Morpho Blue. This integration marks a significant milestone as PYUSD becomes part of a major lending market for the first time, offering users the opportunity to earn yield on their stablecoin holdings in a unique and secure way.
PYUSD, issued by Paxos specifically for PayPal, is now supported on Morpho’s latest decentralized lending platform, Morpho Blue. Users looking to generate yield on their PYUSD can deposit their stablecoins into a specially curated vault by Steakhouse Financial. This vault leverages the permissioned wrapped version of Backed’s tokenized T-Bill ETF, bIB01, and Lido’s wstETH liquid staking tokens as the primary collateral assets, showcasing a blend of traditional finance and crypto innovations.
Adam Levi, Co-founder of Backed, said, “At Backed, we’re creating the most composable and interoperable tokenized real-world assets. We focus on providing best-in-class reliability for our investors, and are looking forward to seeing bToken’s increased adoption in new lending markets.”
A Milestone for PYUSD and the DeFi Ecosystem
This development enhances PYUSD’s utility within the DeFi ecosystem, cementing its position as a top contender among stablecoins shortly after its launch. PYUSD’s integration with Chainlink Price Feeds for accurate on-chain data further demonstrates the commitment to establish it as a leading stablecoin. Operating under the strict oversight of the New York State Department of Financial Services (NYDFS), PYUSD ensures a regulated and secure option for users in the DeFi space.
Steakhouse Financial, a premier DeFi consultancy, has introduced the “Dual Engine” yield strategy in the PYUSD vault. This innovative approach combines the stability of real-world asset yields with the dynamic potential of crypto yields, aiming to optimize returns across varying market conditions. This method reflects a sophisticated blend of financial strategies, catering to investors seeking diversified yield sources.
Sébastien Derivaux, Co-Founder of Steakhouse Financial, said, “At Steakhouse Financial, we deeply believe in open and transparent finance and we work hard, together with leading projects, to bring about this vision. The Dual Engine strategy marks the beginning of delivering real-world yields and crypto yields to work for non-US investors in all market conditions.”
Backed’s bTokens, representing tokenized real-world assets, are at the heart of this initiative. These tokens are fully backed by the underlying assets and comply with the Swiss DLT Act, ensuring secure and compliant trading on the blockchain. The introduction of bTokens to the blockchain offers stable, market-uncorrelated yields, enhancing the DeFi ecosystem’s appeal by merging traditional financial assets with cutting-edge blockchain technology.
Fostering Innovation through Permissionless Lending
Morpho Blue distinguishes itself by allowing the creation of lending markets with any asset, promoting a permissionless and innovative environment. This openness has facilitated the integration of PYUSD, demonstrating Morpho’s commitment to community-driven growth and protocol adaptability. The integration between PayPal, Backed, and Morpho signals a significant advancement in bridging traditional finance with the decentralized sector.
Paul Frambot, Co-founder and CEO of Morpho Labs, said, “At Morpho we believe protocols should do less to enable more. Morpho Blue is a remarkably simple protocol that facilitates lending of any asset. We are excited to see its permissionless market creation being used to support the adoption of PYUSD.”
Overall, this integration highlights the potential for increased adoption of tokenized assets and the promotion of an open, transparent financial system. As PYUSD steps into the DeFi world with Backed’s real-world assets on Morpho Blue, it sets a precedent for future developments, potentially reshaping how digital and traditional financial assets interact and grow within the global financial ecosystem.
