On Wednesday, stablecoin issuer Paxos accidentally minted $300 trillion in PayPal Holdings Inc.’s PYUSD stablecoin on Ethereum, a blockchain “fat finger” error that far exceeded the total circulating supply of US dollars of $2.4 trillion.
“At 3:12 pm 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 the PYUSD supply to expand rapidly and unintentionally, which was quickly identified and resolved. Paxos emphasized that this was not a security breach and assured that all customer funds remain safe.
Still, the fact that a technical problem led to the creation of such a huge number of stablecoins without the necessary collateral has raised eyebrows.
“It’s not the dollar amount we 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 was ranked as the seventh largest stablecoin in the world, with a market value of $2.64 billion. Each token is fully backed by high-quality, highly liquid reserve assets to maintain its 1:1 peg to the US dollar.
Fat fingers have happened before in the cryptocurrency market. In 2019, Tether, the issuer of the world’s largest dollar-pegged USDT stablecoin, mistakenly minted and quickly destroyed $5 billion worth of USDT.
