Paxos mistakenly mints and burns 300 trillion PYUSD
Paxos mistakenly minted 300 trillion PayPal USD (PYUSD) and removed the excess tokens within roughly 30 minutes, attributing the incident to a technical error during an internal transfer. Paxos said customer funds were not affected.
The newly created tokens appeared on the Ethereum blockchain and were traced to a Paxos hot wallet that sent them to PayPal’s PYUSD smart contract. Paxos posted on X that it identified the issue immediately and burned the excess supply.
The event briefly affected decentralized finance markets. The Aave protocol temporarily froze PYUSD markets as a precaution, and PYUSD’s price moved away from its $1 peg for a short period before returning after the burn. Around the incident window, there were two routine 300 million PYUSD transactions.
Short-lived peg deviations during operational errors usually stem from how DeFi price discovery works. Oracles aggregate quotes from multiple venues, while AMM pools rely on arbitrage to restore parity. When an extraordinary on-chain mint is detected by bots and dashboards, market makers may temporarily reduce inventory or widen spreads, and lending protocols can pause assets via “guardian” roles to avoid under-collateralized positions.
PYUSD's market capitalization at that time was approximately $2.6 billion, and the token is available on several blockchains. The erroneous 300 trillion tokens, if valued at $1 each, would far exceed U.S. federal debt of about $37 trillion and global annual GDP estimated near $117 trillion.
Stablecoin issuers retain the technical ability to mint and burn tokens, and past events have included mistaken large mints that were later reversed. From a smart-contract perspective, incidents like this illustrate how mint and burn permissions are typically centralized in stablecoins. Beyond the technical remedy, events like this highlight governance and transparency expectations for fiat-backed stablecoins.
Short-lived peg deviations during operational errors usually stem from how DeFi price discovery works. Oracles aggregate quotes from multiple venues, while AMM pools rely on arbitrage to restore parity. When an extraordinary on-chain mint is detected by bots and dashboards, market makers may temporarily reduce inventory or widen spreads, and lending protocols can pause assets via “guardian” roles to avoid under-collateralized positions.
PYUSD's market capitalization at that time was approximately $2.6 billion, and the token is available on several blockchains. The erroneous 300 trillion tokens, if valued at $1 each, would far exceed U.S. federal debt of about $37 trillion and global annual GDP estimated near $117 trillion.
Stablecoin issuers retain the technical ability to mint and burn tokens, and past events have included mistaken large mints that were later reversed. From a smart-contract perspective, incidents like this illustrate how mint and burn permissions are typically centralized in stablecoins. Beyond the technical remedy, events like this highlight governance and transparency expectations for fiat-backed stablecoins.
