On Wednesday, stablecoin issuer Paxos accidentally minted $300 trillion of PayPal Holdings Inc.’s PYUSD stablecoin on Ethereum — a “fat finger” glitch on the blockchain that far exceeded the total $2.4 trillion circulating supply of the U.S. dollar.
“At 15:12 EST, Paxos erroneously 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 error caused the PYUSD supply to expand rapidly and unintentionally, which was quickly identified and resolved. Paxos stressed that it was not a security breach and assured that all customer funds remain secure.
Still, the fact that a technical problem led to such a huge amount of stablecoin creation without the necessary security has raised eyebrows.
“It’s not the dollar amount you have to think about. It’s the fact that this is an asset with collateral that can be created without the collateral,” said popular pseudonymous market commentator VBL’s Ghost.
At the time of writing, PYUSD was ranked as the world’s seventh largest stablecoin 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.
Mistakes have happened before in the crypto market. In 2019, Tether, the issuer of the world’s largest dollar-pegged stablecoin USDT, mistakenly minted and quickly destroyed $5 billion in USDT.
