USDPaxos Accidentally Mints and Burns $300 Trillion in PayPal Stablecoins, Prompting Aave Market Freeze
Technical glitch sparks largest-ever mint in crypto history as DeFi platforms move swiftly to contain fallout
TL;DR:
- Paxos mistakenly minted and burned $300 trillion worth of PayPal USD (PYUSD) on Ethereum, citing a technical error.
- Aave froze its PYUSD markets to prevent potential contagion, allowing only withdrawals and repayments.
- The event reignited debate on stablecoin risk controls, regulatory oversight, and DeFi’s exposure to centralized issuers.
A startling event rippled through the digital asset ecosystem on October 15, 2025, when blockchain analytics flagged a $300 trillion mint and subsequent burn of PayPal USD (PYUSD) by issuer Paxos on Ethereum. The mint was executed and reversed within roughly twenty minutes, costing just $2.66 in gas fees.
Paxos, which manages PYUSD under regulatory supervision, swiftly issued a statement confirming the anomaly as an internal technical error rather than a hack or security breach. “At 3:12 PM EST, Paxos mistakenly minted excess PYUSD as part of an internal transfer. Paxos immediately identified the error and burned the excess PYUSD. This was an internal technical error. There is no security breach. Customer funds are safe,” the company wrote on X.
The sheer magnitude of the minting dwarfed all financial reference points—roughly 2.5 times the world’s total GDP, which the IMF estimates near $117 trillion, and far exceeding the $2.4 trillion in U.S. physical currency currently in circulation. Although the tokens were instantly destroyed, the event triggered widespread shock across the crypto community and DeFi participants, given that such errors highlight the delicate balance between algorithmic precision and human oversight in stablecoin operations. Analysts immediately compared the incident to prior smart contract mishaps, emphasizing how a few lines of code or a misconfigured transaction could briefly create sums greater than the entire global economy.
The repercussions extended beyond Paxos. Aave, one of the largest decentralized lending platforms by total value locked, moved to freeze its PYUSD markets as a precautionary step. Deposits and new borrow positions were disabled, while users retained the ability to repay debts and withdraw existing funds. Developers at BGD Labs, a key Aave contributor, proposed technical safeguards, including halting stable debt token minting and deploying a “Liquidations Grace Sentinel” to temporarily delay liquidations until systems stabilized. The Aave community began preparing for a governance vote to restore operations once confidence returned.
The swift response underscored DeFi’s sensitivity to centralized counterparties whose stablecoins underpin lending pools and collateral frameworks. Amanda Fischer, policy director at Better Markets, noted the regulatory implications: “If someone with a fat finger error can increase the total supply of a stablecoin by a factor of 120,000, then perhaps regulators should proceed cautiously with granting that firm a national bank charter.” The comment captured a growing unease within both the regulatory and DeFi sectors about the systemic importance of stablecoin issuers whose technical infrastructure directly influences crypto price indexes and risk-weighted liquidity.
Market sentiment remained steady despite the shock, as on-chain records confirmed the $300 trillion mint had no real economic impact after the tokens were burned. Still, the incident reignited scrutiny of stablecoin trust assumptions, particularly within protocols integrating PYUSD liquidity. Traders and developers alike debated how quickly a glitch at a single issuer could cascade through the coin market cap rankings or distort real-time crypto price data feeds that power trading dashboards and risk engines.
The episode, though brief, has already entered the industry’s history books as one of the most extreme “fat-finger” events ever recorded on a public blockchain. Paxos’ transparency and Aave’s defensive actions limited any measurable damage, but the shock served as a reminder that even in the age of on-chain auditing and regulatory compliance, the digital finance system remains vulnerable to ordinary human error—errors that, on this scale, can temporarily rewrite the crypto price index of the entire world.
This article has been refined and enhanced by ChatGPT.
