PYUSDx breaks through US$100 million, M0 CEO explains in detail the stablecoin business model

The PYUSDx platform jointly launched by PayPal, M0 and MoonPay was officially launched. The first three products have processed approximately US$100 million in transaction volume.

The PYUSDx platform allows companies to issue programmable tokens supported by PayPal USD (PYUSD) in full reserve at a 1:1 ratio. Currently, Saturn, Concrete and Cap, three real-time products based on the platform, have processed a cumulative transaction volume of approximately US$100 million.

Companies can independently control token policies and allocate the benefits generated by underlying reserves. Through a shared exchange facility, token conversions between supports are carried out at parity, eliminating the need to establish a separate liquidity pool. Luca Prosperi, CEO and co-founder of M0, said that PYUSDx gives companies control over token rules, revenue and management rights that cannot be obtained by directly integrating PayPal USD.

Infrastructure Background and First Applications

PayPal, MoonPay and M0 jointly launched the platform in February this year to provide infrastructure support for developers who want to issue application-specific stablecoins without building the underlying token and reserve systems from scratch. With the official public beta, Saturn, Concrete and Cap are using PYUSDx to deploy three different products: Saturn runs a bitcoin-backed lending product, Concrete runs an on-chain investment vault, and Cap provides a credit services platform.

According to Prosperi, the amount processed through the platform by these three products is approximately US$100 million. It should be noted that this data refers to the transaction volume processed, not the liquidity of PYUSDx or the reserve value held against token holdings.

Give companies full control over token rules

Companies can integrate PYUSD as an existing stablecoin, or use PYUSDx to deploy stand-alone tokens with custom settings. Prosperi pointed out that the second option allows builders to set up management roles, compliance controls and upgrade policies for their products.

"When you hold someone else's stablecoin, you use its programming logic and rulebook," Prosperi said. In the case of direct integration of PYUSD, functions such as freezing, suspension, compulsory transfer, casting and destruction all follow the rules set by the issuer. Prosperi said that most of the roles associated with custom PYUSDx tokens actually belong to the enterprise deploying it.

Each builder can choose an administrator, apply compliance controls based on its own policies, and decide how software upgrades should be handled. According to Prosperi, companies can choose to automatically adopt M0 's audited upgrade plan or follow their own processes.

Economic model innovation: revenue attribution builder

This model also gives companies the right to share in the economic benefits created by their tokens. Prosperi said that the proceeds generated by PYUSD are owned by its issuer, Paxos, while the proceeds generated by PYUSDx, which supports custom tokens, can be sent to a treasury address chosen by the builder.

PYUSDx tokens are non-based, which means that the holder's balance will not automatically change as earnings accumulate. Prosperi said companies can use the proceeds to reduce expenses, fund holder rewards, or charge funds to the income statement. "The floating income economy, which historically belonged to issuers, is now at a higher level and controlled by builders."

Prosperi also stated that builders can use templates that accept other approved stablecoins as reserves and set separate limits for each asset. Encapsulation and decapsulation are carried out in a 1:1 ratio through a universal exchange facility, while transmission between different blockchains uses a destruction and casting mechanism.

Three-tier reserve structure guarantees security

According to Prosperi, each token issued by a company is fully supported by the PYUSDx stored in the on-chain contract in a 1:1 ratio. Users can check the contract to verify the reserve amount behind the token.

PYUSDx is backed by PYUSD reserves held by MoonPay Digital Assets Limited, the issuer of PYUSDx. PayPal USD is developed by Paxos Trust Company, N.A. Issue, corresponding to US dollar deposits, US Treasury bonds and cash equivalents.

The reserve structure is divided into three levels: from custom tokens to PYUSDx, then to PYUSD, and finally to the assets corresponding to PYUSD. Prosperi emphasized that every link in the structure is fully reserved.

There is a clear division of responsibilities among all parties: M0 provides on-chain infrastructure without access to funds;MoonPay manages reserves supporting PYUSDx;Paxos holds assets supporting PYUSD. Paxos is a national trust bank supervised by the Office of the Comptroller of the Currency (OCC). The OCC has proposed under the GENIUS Act to implement reporting requirements for issuers of payment stablecoins under its supervision.

Under the proposal, regulated issuers are required to submit a confidential report to the OCC every week covering every payment stablecoin they issue. In addition, additional information will need to be submitted quarterly to meet the requirements of the federal stablecoin framework.

Shared reserves for parity conversion

Stabiloins with independent reserve pools may rely on individual markets and liquidity providers for conversion. Prosperi said that corporate-issued tokens on PYUSDx are actually different packaging forms of the same underlying PYUSDx assets.

To convert from one custom token to another, you need to first decapsulate the first token into PYUSDx, and then create the second token through the encapsulation process. According to Prosperi, the shared exchange facility completes conversions at parity and does not generate price differences. The project does not require capital injection to establish an independent liquidity pool for this process. Prosperi said common backing also eliminates the need to establish secondary markets between token pairs issued by different companies.

"There is no need to launch a secondary market because there is nothing to price: these tokens are the same asset wearing different strategies," Prosperi said. He likened the arrangement to different bank deposits cleared at parity through joint settlement of assets. In the PYUSDx structure, settlement assets are fully reserved, and smart contract transactions process the clearing process.

Legal currency conversion involves multiple steps. Prosperi said that users first convert custom tokens to PYUSDx at a parity price, then convert PYUSDx to PYUSD, and finally use withdrawal or redemption services that support PYUSD-to-dollar transactions.

Application Scenarios and Future Outlook

M0 also uses the same redemption and bridging tools in its other tokenized financial products. Prosperi said that current infrastructure makes Saturn and Cap tokens interchangeable, and in the future it will be possible to connect digital dollars backed by different reserves with PYUSD-backed tokens.

In June this year, Mastercard included PYUSD settlement in services covering Ethereum, Solana, Polygon, Base, Arbitrum, Canton, Tempo and XRP Ledger. MasterCard said the service allows issuers and acquirers to settle credit card transactions on weekends, holidays and outside standard banking hours. Existing security controls, fraud protection and dispute resolution procedures remain part of the settlement process.

PYUSDx has entered public use through lending, credit and investment products rather than consumer payment scenarios. Prosperi said companies focused on DeFi-made up the first users because on-chain systems are already part of their standard operating tools.

According to Prosperi's analysis, blockchain activity can show whether tokens issued by companies have shifted from mortgage use to payment use. He identified two key metrics: token speed and counterparty composition.

Velocity : A measure of the ratio of transfer transaction volume to outstanding supply. Collateral is usually kept in a single location, while tokens used for payment are moved more frequently between different addresses. "If the speed of the PYUSDx token remains at DeFi levels a year later, it means that it has not yet left the laboratory," Prosperi said.

Counterparty Mix : Tracking transfer destinations and the amount of activity flowing to fiat currencies. Prosperi said merchant settlements and payroll payments will manifest themselves in small, frequent transfers to non-smart contract addresses, as well as transactions that are unsealed into fiat currencies.

Prosperi stated that the distribution strategy will determine whether such activities develop in PYUSDx products. Companies with millions of existing users will decide whether the infrastructure will become part of daily payments and merchant settlements.