PayPal, a financial company operating an online payments system, launched its first-ever stablecoin on August 7, 2023.
Dubbed as PayPal USD or PYUSD, this stablecoin is 100% backed by the U.S. dollar, providing users with a reliable digital currency that can maintain a steady value despite the notorious volatility of the crypto market. It’s an leap that signals PayPal‘s commitment to enriching its suite of crypto services.
However, the launch of PYUSD has not been without its challenges. Following the announcement, there was a surge of fake PYUSD tokens in the market. Users are advised to verify the authenticity of the tokens before making any transactions. The real PayPal USD token was created in November 2022 and can be verified at its contract address.
Hence, any PYUSD tokens spotted on platforms such as UniSwap or comparable decentralized exchanges are, in all likelihood, imposters.
Data from the decentralized exchange scanner, DEX Screener, has flagged almost 30 new token pairs with the misleading “PYUSD” label.
Differing from the legitimate PayPal USD token’s origin on its verified contract address, these faux PYUSDs have been minted across a spectrum of chains. Among them are the BNB Smart Chain, Ethereum, and Coinbase‘s emerging layer 2, named Base.
Highlighting the magnitude of this issue, one of these counterfeit PYUSD tokens on Ethereum reported an astounding trading volume of $2.6 million shortly after PayPal’s stablecoin announcement. Initially skyrocketing by over 30,000% in its first eight hours, this token’s value nosedived, shedding more than 66% from its peak.
Interestingly, not all imitators took a straightforward route. One notably amusing variant chose the moniker “PepeYieldUnibotSatoshiDoge”, witnessing an over 3,000% increase in merely four hours.
The cryptocurrency community should approach these tokens with caution. Many of these deceptive PYUSD tokens function as “honeypots”. In layman’s terms, these tokens trap investors’ funds, preventing any resale and effectively rendering their investments void.
Historically, the crypto landscape has seen similar incidents. The recent “LK-99” token, aiming to capitalize on the superconductor buzz, and an array of more than 50 UFO-themed memecoins in response to U.S. Congressional hearings on potential alien cover-ups are testimony to this recurring phenomenon.