PayPal is expanding the use of its PYUSD stablecoin by linking it to onchain financing for artificial intelligence infrastructure, marking a significant step in how dollar pegged tokens are applied beyond payments and crypto trading. The company said PYUSD will be used as the settlement currency for loans issued through USD.AI, a protocol that provides funding to AI focused businesses. These loans are designed to support capital intensive needs such as graphics processing units, data centers, and related compute infrastructure. Borrowers will be able to receive funds directly into PayPal accounts, connecting blockchain based financing with familiar payment rails. The initiative reflects PayPal’s broader strategy to position PYUSD as a programmable digital dollar suitable for large scale commercial use cases, particularly as demand accelerates for faster and more flexible funding models in emerging technology sectors.
The structure is intended to showcase how stablecoins can support long term financing arrangements while enabling automated settlement tied to contracts, usage, or performance. By denominating AI infrastructure loans in PYUSD, the model aims to reduce friction in capital deployment while maintaining transparency onchain. USD.AI has built its system around tokenized collateral, converting compute assets such as GPUs into onchain representations that back issued credit. The protocol currently secures hundreds of millions of dollars in compute backed assets, highlighting growing interest in alternative financing frameworks for AI development. Industry participants increasingly view stablecoins as efficient tools for moving large sums quickly while maintaining auditability, especially as traditional financial systems face strain from the scale and speed of AI related investment demand.
To encourage early participation, PayPal and the USD.AI Foundation plan to introduce a one year incentive program offering a yield of 4.5 percent on up to one billion dollars in customer deposits, expected to begin in early January. The incentive is designed to attract liquidity and demonstrate the viability of PYUSD as a settlement layer for infrastructure funding. The move comes amid rapidly rising global spending on AI compute, with financial institutions projecting trillions of dollars in investment over the coming years. As AI infrastructure requirements grow, pressure is mounting on existing capital markets to adapt. PayPal’s latest initiative positions PYUSD at the intersection of stablecoins, enterprise finance, and AI growth, signaling how digital dollars may play a role in funding the next phase of large scale technological expansion.
