Trump’s USD1 Flips PYUSD ($4.9B) as Binance Airdrop Ignites Supply Shock

World Liberty Financial’s USD1 stablecoin has officially overtaken PayPal’s PYUSD, hitting a market capitalization of $4.9 billion as of Monday morning. The flip, confirmed by on-chain data, cements the Trump-backed asset as the sixth-largest stablecoin, fueled by a sovereign wealth injection and a massive Binance incentive campaign that went live this week.

The Liquidity Engine: $40M in WLFI

While organic demand plays a role, the surge is mechanically driven by Binance’s aggressive yield farming program. Started January 23, the exchange is distributing $40 million in World Liberty Financial (WLFI) governance tokens to USD1 holders over a four-week window. The annualized yield (APY) for holding the peg has attracted mercenary capital, draining liquidity from competitor pools.

According to the campaign terms, users staking USD1 in margin or futures accounts receive a 1.2x multiplier on rewards, a structure explicitly designed to deepen liquidity for institutional derivatives trading.

The Sovereign Whale

Retail farming accounts for the velocity, but the baseline supply represents a geopolitical shift. A significant portion of USD1’s capitalization stems from MGX, the Abu Dhabi state-backed investment firm. MGX utilized USD1 to settle a $2 billion investment in Binance, a transaction that effectively locked massive supply into the ecosystem.

This marks a departure from standard stablecoin mechanics; rather than individual mints, USD1 is being weaponized as a settlement layer for sovereign-level M&A. Eric Trump, in a post on X, framed the capitalization flip not as a crypto milestone but as a “shift in global money,” a statement that blurs the line between private enterprise and diplomatic leverage.

The “Regulated” Defense

Despite the political noise, the technical architecture leans on established trust rails. USD1 is issued by BitGo Trust Company, a South Dakota-regulated custodian, with reserves backed 1:1 by U.S. Treasury bills. This custodial firewall attempts to insulate the token from direct conflict-of-interest claims, though the market remains fixated on the issuer’s ties to the sitting U.S. administration.

With the airdrop running through February 20, the supply gap between USD1 and PYUSD ($3.7B) is expected to widen as traders rotate capital to capture the subsidized yields.