On Wednesday, stablecoin issuer Paxos accidentally minted $300 trillion worth of PayPal Holdings Inc.’s PYUSD stablecoin on Ethereum – a “big finger” error on the blockchain that far exceeded the total circulating supply of US dollars of $2.4 trillion.
“At 3:12 p.m. EST, Paxos mistakenly minted excess PYUSD as part of an internal transfer. Paxos immediately identified the error and burned the excess PYUSD,” Paxos announced on X.
The issuer explained that a technical issue caused a rapid and unintended expansion of the supply of PYUSD, which was quickly identified and resolved. Paxos stressed that this was not a security breach and assured that all customer funds remained safe.
Nonetheless, the fact that a technical glitch led to the creation of such a quantity of stablecoins without the required collateral raised eyebrows.
“It’s not the dollar amount you should be thinking about. It’s the fact that this is a collateralized asset that can be created without collateral,” said a popular pseudonymous market commentator, VBL’s Ghost.
At the time of writing, PYUSD ranked as the seventh largest stablecoin in the world, with a market cap of $2.64 billion. Each token is fully backed by highly liquid, high-quality reserve assets to maintain its 1:1 peg to the US dollar.
Fat finger mistakes have happened before in the crypto market. In 2019, Tether, the issuer of the world’s largest dollar-pegged stablecoin USDT, minted by mistake and quickly destroyed $5 billion in USDT.
