Token extensions are ‘a big boon’ for why PayPal is using Solana for stablecoins, says PayPal’s crypto chief

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Solana’s token extensions were a key factor in the expansion of PYUSD, PayPal’s flagship stablecoin, to the Solana blockchain, said Jose Fernandez da Ponte, Senior VP of PayPal’s blockchain division, during this week’s Solana BreakPoint event .

Originally issued on Ethereum, PYUSD later made its debut on Solana in an attempt to provide users with “a fast, easy and cheap payment method.” The integration was expected to improve consumer and merchant experiences.

Da Ponte reiterated during the Solana BreakPoint event that the addition of Solana’s token extensions made it a good fit for PayPal’s infrastructure.

“The first chain was Ethereum. We all know that Ethereum is not the best solution for payments when we look at primitives,” da Ponte said when asked why PayPal decided to launch PYUSD on Solana.

“If you’re in retail payments, you have to do at least 1,000 transactions per second, and you have to do some things that differentiate a payment from a transaction… There’s a lot more to what you have to do.” he added.

Solana claims to be able to handle up to 65,000 transactions per second at minimal fees of just $0.0025. This performance contrasts sharply with Ethereum, which can typically process only 15 transactions per second at fees ranging from $1 to $50.

In other words, transactions on Solana are often completed within seconds, while similar transfers on Ethereum can take several minutes. This efficiency has contributed to a major increase in Solana adoption for stablecoin transfers over the past year, according to a study from Artemis.

“So it was very easy when we looked at where we’re going next and what’s the right chain for payments,” da Ponte noted. “It’s not just the speed, it’s not just the flow that’s important. I was talking about token extensions. The token extension was a very good factor for us.”

Released earlier this year, Solana token extensions are a set of advanced features that allow developers to create tokens with unique features tailored to specific use cases. Developers can incorporate complex behaviors into their issued assets without compromising security or scalability.

The feature aims to unlock a variety of use cases across different sectors, including stablecoins, gaming, as well as financial services.

One of the first stablecoin issuers to adopt Solana’s token extensions was Paxos, which used the feature to issue its USDP stablecoin.

GMO Trust, the issuer of the Japanese yen-pegged stablecoin GYEN and the US dollar-pegged ZUSD stablecoin, has also incorporated this feature into its stablecoin offerings.

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