Author: Sam, Messari Analyst
Translated by: Tim, PANews
PANews Editorial Note: With Circle's successful IPO and impressive market performance, market attention to stablecoins is gradually increasing. The Plasma chain supported by Tether completed its ICO last night, with a $500 million allocation being "snatched up" within minutes. While Plasma is primarily labeled as a stablecoin chain, the market knows little about its technical architecture and functional characteristics. This article will help fill this "cognitive gap".
Previously, PANews wrote an article about Plasma Building a Blockchain Exclusively for Stablecoins: What Makes Plasma Different After Raising Over $24 Million? for readers to reference.
Main Text:
Sneak Peek
- Plasma is not just a stablecoin chain, but also a Bitcoin sidechain and privacy solution.
- Tether will likely launch native USDT on the Plasma chain, enabling low-slippage Bitcoin exchange and minimally trusted Bitcoin-collateralized stablecoin lending, which will be key to opening new BTCFi demands.
- Similar to Circle's payment network, Plasma serves as a payment network with bank partners and custodians, supporting USDT's fiat withdrawal channels.
Plasma is often simplified as a "stablecoin chain". This understanding is not wrong, but misses the key point. What Plasma truly builds is a financial infrastructure layer specifically for Bitcoin, supporting stablecoins as its underlying foundation. It is a Bitcoin sidechain that provides native USDT support, protocol-level privacy protection, and a Gas model that doesn't require users to hold highly volatile governance tokens. This is not just about payment functionality, but about constructing a native Bitcoin settlement layer priced in US dollars.
Supported by Peter Thiel, Tether, and Bitfinex, the project integrates three emerging technology trends: Bitcoin Rollup technology, stablecoin infrastructure, and on-chain privacy protection. Each concept itself has investment value, and their combination is likely to build the most valuable financial infrastructure layer in the Bitcoin ecosystem.
Plasma is a Bitcoin Sidechain, Not Limited to Stablecoin Applications
Plasma's architecture uses Bitcoin as its final settlement layer. The chain functions like a Layer 2 and sidechain, periodically anchoring state commitments to the Bitcoin blockchain to reduce trust dependency assumptions and inherit Bitcoin's security model.
Plasma technology is likely to lead a new wave of BTCFi, as it unlocks the functions users truly desire: exchanging large amounts of Bitcoin with extremely low slippage and directly pledging native Bitcoin to borrow stablecoins. This seemingly basic demand actually requires two core supports: deep liquidity (provided by Tether) and a trust-minimization mechanism (supported by BitVM 2).
With direct endorsement from Tether, Plasma gains access to one of the deepest liquidity asset pools in the crypto world. The platform is highly likely to natively support USDT, an advantage that crushes Bitcoin sidechains relying on cross-chain stablecoins or new native stablecoins. It will essentially become the core settlement layer for BTC/USDT trading, a functionality that the Bitcoin mainnet itself currently lacks.
Unlike other Layer 2 and sidechains that require Bitcoin wrapping or custody bridges, Plasma has built a dedicated Bitcoin cross-chain bridge, operating through a permissionless validator mechanism and promising to adopt the BitVM 2 solution upon its launch. This will enable more seamless user access while effectively reducing counterparty risk.
Built-in Privacy Features
Privacy protection is directly integrated into Plasma's transaction model. Users can opt into shielded transfer functionality that hides transaction party and amount information without sacrificing interoperability or user experience. Unlike ZK privacy solutions (such as ZCash and Aztec) that require specialized tools or browser extensions, Plasma's privacy model achieves application layer compatibility by introducing basic account abstraction elements, making its user experience closer to banking services than another EVM chain.
This design supports selective disclosure, allowing users to prove specific transaction details when needed (such as to exchanges, auditors, or compliance platforms) without exposing all on-chain activities. This privacy system ensures individual control while achieving interoperability with regulatory frameworks.
Crucially, Plasma technology allows users to transact without holding or using volatile native tokens. Gas fees can be directly paid with USDT or BTC, with conversions automatically completed through oracle mechanisms or internal pricing systems. This design not only simplifies user experience but also eliminates transaction traceability risks associated with purchasing and consuming native tokens, making Plasma an ideal choice for users seeking low-friction, low-profile financial operations while maintaining excellent usability and privacy protection.
Stablecoin Perspective
The key point to understand is that Plasma represents the most direct investment in Tether. Traditionally, Tether was just a liquidity layer across platforms, whereas Plasma is positioned as a vertically integrated execution environment where USDT is not just one of many assets, but exists as the chain's native component.
This brings two potential value-adding spaces. The first is market-driven: as stablecoin demand grows (especially for global users seeking US dollar exposure), USDT-based products might experience strong foundational momentum. With Circle's IPO refocusing market attention on stablecoins, assets linked to Tether's infrastructure are poised to benefit from rising market enthusiasm.
The second point is structural advantage. Plasma can connect financial institutions with compliant global payment systems. This is similar to Circle's payment network but serves the Tether ecosystem. The system will have complete anti-money laundering capabilities to support enterprise entry, integrate with bank partners and custodian institutions for fiat conversion channels, while still supporting permissionless DeFi applications. With near-instant and low-cost international settlement capabilities, Plasma can compete with traditional banking networks. Considering USDT's circulation is nearly 2.5 times that of USDC, and depending on the value assessment of Circle's payment network, I believe the institutional demand from payment network functionality alone is sufficient to support a $500 million fully diluted valuation (FDV).
The financial layer built on Bitcoin, Plasma, provided with launch liquidity by Tether and enhanced with native privacy features, can achieve goals that other cryptocurrency projects find difficult to reach.
