Paxos expands to Solana: Will the move benefit SOL?

• Paxos got approval from NDFS to expand to Solana.
• Price of Solana surged massively, however, development activity on the network fell.

Solana [SOL], over the last few weeks, has seen tremendous growth in terms of price and interest in its protocol. This led to many questioning the longevity of its rally.

However, a recent development around the Solana ecosystem may help in establishing the bullish narrative around SOL.

Paxos buys the Solana hype

On 22nd December, Paxos announced its expansion to Solana, marking the first move to a new blockchain for its stablecoin, USDP, initially launched on Ethereum.

The New York Department of Financial Services reportedly approved Paxos’ initiative, enabling public access to USDP on Solana by mid-January 2024.

Walter Hessert, Paxos Head of Strategy, emphasized the significance of supporting Solana, stating,

“The expansion of our stablecoin platform to support Solana marks an important step towards making stablecoins ubiquitous for everyday consumers.”

In addition to USDP, Paxos managed the issuance of BUSD until directed by NYDFS to halt creation. Following this, a significant portion of circulating BUSD has been redeemed. Paxos also collaborates with Paypal for the issuance of PYUSD stablecoin.

Currently, USDP ranks as the ninth largest stablecoin by market capitalization. Moreover, Binance stands as the most active exchange for USDP, with the highest trading pair being with USDT.

SOL reaps the benefits

These factors can more positively affect the stablecoin inflow on the network.

New data has revealed a rise in both Solana’s stablecoin market cap and growth. Notably, stablecoin inflow, especially in December, surpassed previous months, representing the first consistent increase in several months.

These factors have helped SOL see growth.

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At press time, SOL was trading at $98.52 and its price had grown by 17.41% in the last 24 hours.  The volume at which SOL was trading, also spiked during this period.

However, the development activity around the network fell considerably during this period. This meant that developers were not contributing to Solana’s GitHub as frequently as before.

Source: Santiment