Disclaimer: This post contains thoughts on crypto, a volatile and risky asset class. It is not investment advice, and you should do your own research. All information is for educational purposes only. Please don’t take risks with money you’re not willing to lose.

Whether it’s yield farming, bridging between ecosystems, or getting rugged in real time, dollars, or something close to them, are the escape route. Yet, despite the sheer size of the stablecoin economy (>$200b and growing), the infrastructure around it has seen marginal evolution. Onchain dollar flows live at the mercy of slow bridges, centralized rails, and protocols that were retrofitted to accommodate stables instead of designed for them. In theory, stablecoin infra should live natively on a chain purpose-built for it, rather than be strapped to general-purpose chains as an afterthought. Given how most of global crypto commerce already relies on USDT, especially outside the US, that idea is now starting to resonate.

Roots

Volatile prices, clunky exchanges, and a complete lack of reliably stable assets defined the early days of crypto. Most trading pairs were denominated in BTC or ETH, meaning traders had to either stay exposed to volatile assets or repeatedly off-ramp profits into the banking system. This wasn’t just inefficient, but structurally broken.

Stablecoins emerged as a solution to that problem: combine the speed and programmability of crypto with the price stability of fiat. Consequently, Tether launched on the Omni Layer in 2014. Three years later, it had become the first widely adopted fiat-pegged stablecoin, anchoring itself to USD and setting the standard for all future entrants. As crypto markets matured, stablecoins became the backbone of trading and infrastructure. By 2020, they weren’t just exchange instruments, they were foundational to the rise of DeFi. Lending, borrowing, yield farming, all priced in dollars. Stablecoins were no longer just a nice-to-have, but an operational necessity. The market followed. In just two years, the total stablecoin supply exploded from $5b to over $150b. Today, that number floats around all time highs of ~$253b, with Tether alone commanding over 60% of the entire market.

Despite some early controversy regarding potentially insolvent reserves, Tether’s dominance has remained steady year after year. USDT has not only maintained its lead in both volume and adoption, but now operates as more than just a crypto-native asset. It’s used for payroll in Argentina, remittances in Turkey, and even settled a $45m crude oil transaction in 2024. Circle’s USDC may be more compliant and bank-friendly, but Tether is more profitable, doesn’t split revenue with distribution partners like Coinbase, and has captured the market that matters: unbanked economies and non-Western demand.

Tether’s primary issue is that their usage benefits everyone but themselves. Ethereum and Tron, the main rails for USDT, rake in the fees. On Ethereum, every stablecoin transfer burns gas. On Tron, despite low-cost reputation, fees are creeping up. Neither were built to optimize for high-volume, low-complexity transfers. But what if the base layer was built for velocity from day one?

Bird’s Eye View

Plasma is a protocol designed to support permissionless, modular, and secure stablecoin issuance with an early focus on optimizing for the asset that already dominates global crypto flows: USDT.

While many protocols mint a new dollar token, Plasma's mission centers on Tether's liquidity flows. The native stable asset, USDT0, anchors this, but also lets anyone issue branded, dollar-pegged stablecoins on top of its infrastructure using a standard called Plasma SIPs, or Stablecoin Issuance Protocols. These can be public (available to anyone) or private (controlled by issuers), with collateral parameters, risk profiles, and even revenue splits customized at deployment.

At the center of it all sits XPL, Plasma’s native token, which governs the system and captures value from issuance fees, redemptions, and interest flows across all stablecoins issued via the platform.

This architecture removes trust-based bottlenecks, allows niche or branded stables to emerge with baked-in collateral standards, and creates a composable base layer where issuance doesn’t rely on opaque banks or black-box rehypothecation. In more practical terms, Plasma doesn’t compete with Tether, but amplifies it. The protocol is simply built to honor USDT’s dominance while displacing the inefficient rails beneath it.

Technicals

PlasmaBFT Consensus

Plasma uses a custom implementation of HotStuff called PlasmaBFT. It condenses the traditional three-phase commit into two phases, reducing latency without sacrificing liveness. This matters for stablecoin settlement, where the limiting factor is speed, not complexity.

Validators vote on proposed blocks. Once a quorum is reached, their votes form a Quorum Certificate (QC). If a leader drops, backup leaders aggregate these QCs to keep the chain moving without reorgs or downtime.

Pipelining allows multiple blocks to be proposed and validated in parallel, which is now standard among high-performance chains.

Bitcoin-Anchored Security

Every few blocks, Plasma posts a Merkle root of its chain state to Bitcoin. These are immutable checkpoints. Unless someone reorgs Bitcoin (impossible), they can’t be tampered with. This anchoring gives Plasma the censorship resistance of Bitcoin without having to inherit its full architecture.

Developers or users can verify Plasma state against Bitcoin’s global ledger, enabling third-party auditability and trust-minimized guarantees.

Full EVM Compatibility

Even though it optimizes for a single token, Plasma is fully EVM-compatible. Contracts written for Ethereum can be deployed with no changes. This makes it easy for DeFi protocols to port over or launch natively with minimal tooling friction.

The execution engine is powered by Reth, a modular Ethereum client written in Rust. Its architecture allows for experimentation with new data availability or gas abstraction layers.

Free ≠ Unprofitable

Made possible by Plasma’s unique execution design, which separates general-purpose transactions from value transfers, simple USDT transfers are totally free. At first glance, this fee structure seems like a race to zero.

The key nuance is that Plasma isn’t subsidizing gas fees, but eliminating them by design.

Transfers that don’t invoke contract logic (i.e. simple sends between addresses) don’t run through the EVM. Instead, they’re handled by a parallel system that processes balance updates with minimal computation. This bypasses traditional execution costs entirely.

All other operations are still subject to normal transaction fees. In other words, value transfer is free, but value creation is monetized.

Therefore, Plasma generates revenue by monetizing velocity-adjacent services:

• Contract calls: All protocol-layer interactions incur gas

• Routing logic: Stablecoin FX, yield redirection, business logic

• Wrapped tokens: Applications using synthetic or yield-bearing stablecoins interact with the EVM

As volume grows, these contract-layer flows are expected to eclipse the basic transfer layer in economic weight. It’s not about charging for every dollar moved, but rather taking a cut of the ecosystem that forms around those moves. After all, this is how traditional payments systems work. Visa doesn’t charge you to swipe a card, it takes a fee from the merchant who benefits from instant settlement. Plasma applies the same logic except onchain.

Ecosystem

Given the above notions, think of USDT as a public utility. It’s fast, cheap, frictionless. The value capture doesn’t come from the pipes, but from the services built on top. FX routing, yield flows, cross-border settlement logic, DeFi contracts. That’s where the fees live.

The GTM is intentionally asymmetric. It hooks users with zero-cost payments, then monetizes the financial activity that naturally emerges once dollars can move trustlessly across borders.

Here’s a snapshot of the early ecosystem joining that flywheel (so far):

• Yellow Card, one of Africa’s top crypto onramps, is partnering with Plasma to route USDT transfers across key remittance corridors and enable dollar access in emerging markets without traditional banking rails.

• BiLira (TRYB), a Turkish lira stablecoin, integrates Plasma to bridge TL and USDT, offering compliant, real-world conversions in regions plagued by currency instability.

• Uranium Digital, in partnership with Tether and Plasma, is launching a 24/7 spot market for physical uranium that is tokenized, settled, and cleared in stablecoins. A niche use case, but a preview of how commodity settlement could evolve.

• Curve Finance, the OG of stablecoin swaps, is deploying to Plasma. It brings low-slippage liquidity essential for any chain aspiring to be the home of dollar flows.

• Ethena, creator of USDe, adds its synthetic dollar stack to Plasma, bringing structured yield and hedging strategies. More composability, more real-world money logic.

• Aave, one of DeFi’s largest lending protocols, is supporting USD0 and exploring Plasma deployment. This opens credit markets and fixed-income rails for Plasma-native borrowers.

• Veda, focused on permissionless stablecoin indices, is building on Plasma to offer structured products and diversified stablecoin exposure.

• Stablewatch, a dashboard for dollar-backed asset analytics, now tracks USD0 issuance and Plasma flows, bringing transparency to new stablecoin deployments and FX corridors.

• Arkham Intelligence is integrating with Plasma to track stablecoin flows using its onchain attribution and deanonymization tools.

In Sum

Plasma is a purpose-built infrastructure play for the one asset that already dominates crypto usage. It rethinks the base layer around stablecoins, strips out unnecessary compute bloat, and dares to make transfers free without breaking the economics. It’s a bet that stablecoins have grown large enough to justify dedicated infrastructure, just as AWS created purpose-built services for cloud-native workloads. Last year, stablecoins settled over $5 trillion in adjusted volume, a figure approaching the combined totals of Visa and Mastercard.

The broader context is even more staggering. In the US alone, systems like Fedwire and ACH move over $1 quadrillion annually. Globally, the demand for efficient, programmable money spans consumer payments, interbank settlement, FX, cross-border remittances, and merchant services.

For millions around the world, Tether is already the most accessible form of digital dollars. That’s the real unlock here. The crypto-native crowd tends to underestimate how critical stablecoins are for the emerging markets where banking infrastructure is fragile or absent entirely. In those regions, stablecoins aren’t speculative tools, they’re lifelines.

If it means anything, the market seems to agree. Plasma raised over $50m publicly via Sonar, echoing ICO-era enthusiasm with novel execution. Investors flooded the raise, chasing exposure to stablecoin-native infrastructure. The deposit cap was increased multiple times to meet retail demand, and the round was backed by both crypto-native whales and VCs like Peter Thiel’s Founders Fund. The appetite for bets on the dollarization of crypto should not be understated.

If stablecoins continue on their current trajectory, Plasma may end up being one of those primitives that just looks obvious in hindsight.

Trillions.