Stablecoin issuer Paxos accidentally minted 300 trillion PYUSD (PayPal USD) tokens on the Ethereum blockchain during what was intended to be a routine internal transfer.
This massive amount—equivalent to roughly $300 trillion USD at PYUSD’s 1:1 peg to the dollar—far exceeded the stablecoin’s normal circulating supply of about $2.3 billion.
That’s more than twice the global GDP estimated at $117 trillion and over eight times the U.S. national debt $37 trillion. The error occurred around 3:12 PM EST, originating from a Paxos hot wallet interacting with PayPal’s PYUSD smart contract.
Blockchain explorers like Etherscan captured the transaction, which cost just $2.66 in Ethereum gas fees. Paxos quickly identified the issue as an “internal technical error” likely a “fat finger” mistake, such as adding extra zeros—previous transactions that day involved only 300 million PYUSD.
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Within 22–30 minutes, the entire minted supply was burned by sending it to a non-retrievable Ethereum address, ensuring no net change in PYUSD’s total supply or circulation.
Paxos confirmed via an official X post: “There is no security breach. Customer funds are safe. We have addressed the root cause.” PYUSD’s price briefly deviated from its $1 peg but stabilized rapidly, and the incident had no impact on user holdings or the stablecoin’s 1:1 backing with U.S. dollars.
Aave, a major lending platform, temporarily froze PYUSD markets as a precaution to verify system integrity and prevent potential exploits. Chaos Labs founder Omer Goldberg also PayPal’s head of blockchain noted this was due to the “unexpected high-magnitude transaction.”
The event sparked brief speculation and memes on social media, with users joking about using the minted tokens to pay off global debt or comparing it to “printing money” cheaper than the Federal Reserve.
Some even theorized it as a deliberate “shadow QE” quantitative easing moment to test stablecoin infrastructure, though Paxos dismissed any malicious intent. Unlike past stablecoin iincidents like the UST’s collapse, this was fully reversed on-chain, highlighting blockchain’s transparency but also the risks of centralized admin controls in permissioned stablecoins.
This glitch underscores vulnerabilities in stablecoin operations, even for regulated issuers like Paxos. While quickly resolved, it raised questions about Centralized stablecoins rely on issuer trust; a similar error in a less responsive system could erode confidence.
Protocols like Aave demonstrated effective risk controls, but such events could trigger flash crashes if not caught early.
With stablecoins increasingly tokenized for real-world assets like real estate via Eric Trump’s World Liberty Financial, incidents like this fuel calls for stricter limits, as seen in the Bank of England’s proposed caps on holdings.
PYUSD remains the eighth-largest stablecoin in DeFi, with strong backing from PayPal. No further issues have been reported as of October 16, 2025, and routine minting like 300 million PYUSD resumed normally.
Algorithmic stablecoin UST lost its $1 peg due to a combination of market sell-off, flawed protocol design, and a death spiral in its LUNA backing mechanism. Systemic failure of a decentralized, algorithmic stablecoin Terra ecosystem.
Catastrophic collapse of the entire Terra ecosystem, wiping out $40 billion in market value. Error detected and resolved within 22–30 minutes by burning the 300 trillion tokens. No change in circulating supply ~$2.3 billion, no loss of user funds, and price stabilized quickly at $1 peg.
Centralized control allowed Paxos to burn tokens using admin keys, leveraging Ethereum’s transparency. Days to weeks, with no effective resolution. UST’s peg began unraveling on May 7, 2022, and collapsed below $0.10 by May 12. UST never regained its peg; LUNA its backing token crashed to near-zero, and investors lost billions.
Brief price deviation from $1 peg, temporary freeze of PYUSD on Aave, and social media buzz. No lasting market disruption. Minor dent in trust, but Paxos’s transparency and quick fix limited fallout. PYUSD remains a niche but stable player in DeFi.
Inherent fragility of algo-stablecoins; vulnerable to market volatility and bank runs.
Overreliance on market confidence and LUNA’s value, no centralized fallback. Highlights risks of centralized stablecoin operations but also the benefits of quick intervention.
Reinforces need for robust internal controls and audits, especially as stablecoins scale.
Likely to draw minor regulatory attention but no systemic threat. The Paxos PYUSD error was a brief, contained operational glitch with no lasting damage, thanks to centralized controls and rapid response.
The UST collapse was a systemic failure of a decentralized protocol, causing massive losses and market-wide fallout. Paxos’s incident underscores the importance of operational rigor, while UST’s collapse revealed the dangers of uncollateralized stablecoin designs.