Stablecoin Market Dips 2.7% as PYUSD Rewards Decline Impacts Growth

• Stablecoin market dips 2.7%, with PYUSD seeing a 40% market cap drop amid reduced yields.
• Euro-pegged stablecoins like EURC rise, benefiting from Base and MiCA-compliance efforts.
• USDC sees cyclical transaction volumes, with Ethereum and Layer 2s capturing distinct segments.

The stablecoin market, currently valued at $170.93 billion, dropped 2.7% since its August 30th high. Although the overall stablecoin supply grew 100x since 2019, recent changes reveal shifts in specific stablecoins.

The market dip coincides with a 40% decline in the market cap of PayPal’s PYUSD stablecoin. As PYUSD rewards fell from an initial 17% to below 7%, holder interest waned, affecting the stablecoin’s growth.

Initially attracted to PYUSD through a partnership with Solana’s Kamino Finance, investors pushed its market cap past $1 billion in August. But the reward reductions shrank PYUSD’s valuation to $618 million.

PYUSD now stands as the ninth-largest stablecoin, with $267 million on Solana and $350 million on Ethereum..

Euro-Pegged Stablecoins Gain Traction

While USD-backed stablecoins dominate the market, euro-pegged stablecoins like Circle’s EURC gain popularity. EURC’s supply increased by over 40% in the last month, with Base seeing significant growth.

EURC’s value on Base surged from $22 million to $48 million. This aligns with Coinbase’s efforts to comply with the EU’s MiCA regulations, which the company promotes as a competitive advantage.

Additionally, the banking industry, traditionally hesitant towards stablecoins, shows more engagement. Societe Generale’s EURCV, the only bank-issued stablecoin on Ethereum, grew 11% to reach a market cap of $41.7 million.

USDC Transaction Volume Shows Cyclical Patterns

USDC transactions show seasonal peaks, peaking near $200 billion during high-activity periods in late 2022. Although transaction volume dropped since then, current levels of $80–100 billion remain above pre-2021 figures.

Moreover, Ethereum holds the majority of transaction volume, though Layer 2 solutions like Arbitrum have acquired a growing share of mid-sized transactions, ranging between $1,000 and $100,000.