- Paxos mistakenly minted 300 trillion Paypal stablecoin (PYUSD) tokens before burning them 22 minutes later.
- The amount created was over twice the value of global GDP and far exceeds the entire stablecoin market cap.
- Paxos describes the event as an internal technical error, with no customer funds affected.
- Crypto experts point to inadequate fail-safes and note that the error may be due to differences in decimal places used by PYUSD.
- Major platforms like Aave reacted by freezing PYUSD to prevent potential risks from similar incidents.
On October 15, Paxos accidentally minted 300 trillion PYUSD, PayPal’s stablecoin, drawing widespread notice from the cryptocurrency community. The error was reversed within 22 minutes as the tokens were burned, which means they were permanently removed from circulation.
According to Etherscan records, the 300 trillion tokens held a value of more than twice the world’s annual GDP. Paxos publicly stated, “This was an internal technical error. There is no security breach. Customer funds are safe. We have addressed the root…”, in response to concerns. Despite the assurances, the company has not yet explained the details or outlined steps to prevent a similar situation in the future.
Users and experts quickly raised questions about controls and processes at Paxos. Several comments pointed out that the company did not appear to check mint instructions against any proof of reserves prior to the event. Market data from DeFiLlama indicates that PYUSD currently has a market cap of $2.64 billion—far less than the amount erroneously minted—and is the eighth largest stablecoin by that measure. For comparison, the total stablecoin market cap is about $307 billion.
Technical contributors, including Mikko Ohtamaa from Trading Strategy, suggest that the underlying issue may relate to PYUSD’s design. Unlike many ERC-20 tokens that use 18 decimal places for precision, PYUSD uses only six, which changes the value each token represents by a factor of a trillion. Security specialist Daniel Von Fange noted that similar mishaps could potentially be avoided by placing stricter limitations on minting permissions, such as limiting how many tokens can be created by any one address. He also warned that without adequate checks, hackers could exploit such weaknesses, referencing incidents like the Lazarus Group attacks.
In response to the incident, the decentralized finance protocol Aave temporarily froze PYUSD to address the risk of further technical problems. Others in the community expressed skepticism about whether less obvious errors could be detected as quickly. Coinbase’s Conor Grogan ranked the event among the most significant accidental token generations to date, comparing it to past incidents involving Binance and Tether.
The fallout centers on concerns about the speed and scale of token minting errors. Industry members continue to monitor for additional explanations from Paxos and for steps to ensure safety within the broader stablecoin ecosystem.
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