PayPal has shown they are all out for crypto and aren't afraid of what comes next. PayPal made its entrance to the industry in 2020, just before Bitcoin had that hell of a bull run.
They did this by integrating crypto payments into their services. Since then, PayPal hasn't folded as they are entirely determined to pursue the crypto venture. So they made another angle in their strategy and decided to create a banger.
The crypto community couldn't hide its joy when it was announced that PayPal stablecoin is now a reality. The details behind the stablecoin launch are simply a thing of art, as they brought new features into play. However, some of these features are quite scary to ignore.
PayPal Stablecoin Goes Live on Ethereum
PayPal crypto stablecoin went live on the Ethereum network on the 7th of August when PayPal made a brief announcement on their X page. PayPal said:
"Today, we’re unveiling a new stablecoin, PayPal USD (PYUSD). It’s designed for payments and is backed by highly liquid and secure assets. Starting today and rolling out in the next few weeks, you’ll be able to buy, sell, hold, and transfer PYUSD."
Today, we’re unveiling a new stablecoin, PayPal USD (PYUSD). It’s designed for payments and is backed by highly liquid and secure assets. Starting today and rolling out in the next few weeks, you’ll be able to buy, sell, hold and transfer PYUSD. Learn more https://t.co/53RRBhmNHx pic.twitter.com/53ur2KmjU7
— PayPal (@PayPal) August 7, 2023
Immediately after the launch of the PayPal stablecoin, it went under criticism as many analysts went deep to research the meme coin. The details are shocking.
PayPal Inserts a Scary Feature Inside Their Stablecoin
According to Pashov on the X platform, some of the codes in the smart contract made for the launch of PayPal's stablecoin seem very strange. In fact, it was scary to him. Apparently, the stablecoin developers created unique code functionalities like freezing accounts and cleaning frozen account balances. Furthermore, they planned to do this using the "asset-protection" roles.
"The new Paypal USD stablecoin has an "asset-protection" role which can wipe your balance in two transactions (first `freeze`, then `wipeFrozenAddress`)
In smart contract security, we call this a "centralisation attack vector," Pashov said.
These two unique codes were created for a particular purpose. Sometimes money laundering agents and terrorist organizations use the stablecoin to transfer money from one place to another.
Sometimes cyber criminals such as crypto scammers use stablecoins to move money. So the "asset-protection" codes are there to ensure asset freezing, assuming the account owner is suspected of these acts.
PayPal Crypto Stablecoin Feature Not Unique — Other Stablecoins Have It
Analyst Pashov researched further and discovered that the feature he termed unique before was also available in many stablecoins. Apparently, the new PayPal stablecoin is not as unique as he thought it would be. In the stablecoin space, the new stablecoin owned by PayPal is in the same category as the USDT and USDC.
Apparently, these types of stablecoins are called centralized stablecoins. They operate on the blockchain but don't have the decentralization feature. They are classified once this because they have a security feature called "centralization attack vector." With this feature, the owner of the stablecoin can easily make changes to the smart contract to freeze and wipe out all the stablecoins contained in a wallet.
"Newsflash: USDT & USDC both have similar attack vectors as well. I thought this one might be different, but it really isn't," Pashov shared his disappointment.