The rise of stablecoins and the necessity of dedicated infrastructure

Stablecoins have rapidly evolved from a niche application to one of the most important innovations in the crypto market, becoming an emerging medium for global payments. In 2024 alone, dollar-pegged stablecoins represented by Tether’s USD₮ processed transactions amounting to as much as $15.6 trillion, equivalent to 119% of Visa’s payment volume during the same period. Furthermore, the latest data indicates that USD₮ has approximately 400 million users in emerging markets. This surge signals the arrival of the “stablecoin singularity”: digital dollars are flowing as freely as information, reshaping the way money moves.

We believe that fully integrating stablecoins into various levels of the global payment system (including P2P, B2B, and P2B) has the potential to greatly improve people’s daily lives. Ideally, blockchain can significantly shorten payment settlement times, bypassing intermediary institutions that charge high fees and can even freeze funds at any time. However, current mainstream blockchains are not optimized for stablecoins, resulting in high transaction fees on networks like Ethereum, forcing users to turn to more centralized alternatives like Tron, which have slightly lower fees.

This is where Plasma comes in—a blockchain tailored for stablecoins. Plasma focuses on one thing: making transfers of stablecoins (like USD₮) fast and free. Unlike general-purpose L1 chains that try to support various applications, Plasma concentrates on stablecoin payments, unlocking advantages both technically and economically, and is poised to become the standard payment layer for a global digital dollar. Because its functionality is limited to stablecoin payments, Plasma can maximize throughput and minimize latency, while completely eliminating transaction fees for USD₮ users. The ultimate goal is to achieve a transfer experience as simple and smooth as sending a text message, which may also bring far-reaching secondary and tertiary effects.

Zero-fee USD₮ transfers: A powerful magnet for liquidity

Although Ethereum currently has the largest volume of stablecoin issuance among blockchains, its architecture results in high transaction fees for stablecoins, often requiring several dollars for each transfer. This has driven many users to switch to the lower transaction fee Tron network. Tron has seized this demand, promoting its low-cost trading model in emerging markets. According to Artemis data, Tron processed approximately $5.46 trillion in USD₮ transfers through 750 million transactions in 2024. If Tron’s rise relies on its low fee advantage, then Plasma’s “zero fee” model takes it a step further, allowing applications to bypass the hassle of paying Gas, which could trigger a wave of larger-scale adoption.

For users, “zero fees” is not just about saving money; it can also stimulate new use cases: when sending $5 no longer requires a $1 fee, micropayments become feasible. Cross-border remittances can also be free from high intermediary fees, arriving in full. Merchants can accept payments in stablecoins without giving away 2-3% of their transaction amount to invoicing and credit card networks. In short, Plasma’s free transfers break the barriers that previously confined stablecoins to trading scenarios, opening up avenues for everyday consumption scenarios. Thanks to the support of the Tether ecosystem, Plasma’s incentive mechanism aligns perfectly with the promotion of USD₮. Liquidity will attract more liquidity; once users realize they can freely transfer value on Plasma, it may attract stablecoin flows from the entire crypto market, further solidifying its position as the preferred channel for digital dollars.

In addition, the growing USD₮ deposits on Plasma and its native issuance capability make it an ideal expansion ecosystem for existing DeFi protocols. Currently, there are protocols focused on stablecoins, such as Curve and Ethena, that have announced plans to deploy on the EVM-compatible Plasma network. At the same time, USD₮, as the network effect of a mainstream stablecoin, makes it the default pricing unit for mainstream exchanges’ Bitcoin spot pairs. For example, since August 2017, the cumulative trading volume of the BTC/USD₮ trading pair on Binance has reached $4.9 trillion. As BTC cross-chain bridge technology matures and trust assumptions decrease, we believe that more liquid Bitcoin will enter the Plasma network in the future, creating a synergistic effect with the familiar pairing of USD₮, which is expected to stimulate more trading activity, especially when users align centralized exchange and on-chain BTC prices through arbitrage.

Comprehensively surpass Ethereum, Tron, and traditional payment rails.

So, how does Plasma perform compared to existing crypto networks and traditional fintech infrastructure? It can be said that Plasma aims to surpass both on multiple dimensions.

Ethereum: Ethereum has a diverse DeFi ecosystem, but at the cost of tight block space and high Gas fees, with even simple USD₮/USDC transfers costing several dollars. Although stablecoins started on Ethereum and account for a large amount of on-chain usage (approximately 35-50%), they mainly involve large transactions, often excluding small users. While Layer-2 Rollup helps reduce costs, Plasma’s approach is more radical—creating a dedicated chain specifically for stablecoins, optimized for speed and cost from the ground up. Since it doesn’t need to “support everything,” Plasma can dedicate all resources to processing stablecoin transfers, thereby avoiding congestion issues on general-purpose chains.

Tron: Tron has become the main network for stablecoin, capturing a significant trading volume of Tether, thanks to its low fees and faster confirmation speed. The cumulative transfer volume of Tron’s TRC-20 USD₮ has reached 22 billion times, far exceeding Ethereum’s ERC-20 at 2.6 billion times, indicating that a high-quality user experience (especially low cost and fast transfers) can significantly enhance market share. Plasma takes user experience to new heights: while Tron still requires payment of $2-3 or even staking TRX for free or discounted transactions, Plasma offers zero fees for USD₮ transfers.

Moreover, Tron’s DPoS architecture has long been criticized for being overly centralized, with only 27 “semi-permissioned” validation nodes, and its network relies on native coins for transaction fees and governance. In contrast, Plasma adopts Bitcoin-level security mechanisms and supports transaction fees paid in stablecoins (if needed), which is undoubtedly a more user-friendly design. If Tron is the current “stablecoin chain”, then Plasma is preparing to surpass it with a better user experience and economic model.

https://gasfeesnow.com/

PayPal and Traditional Financial Payment Channels: Traditional payment processors and fintech platforms are also actively paying attention to the development of stablecoins. PayPal launched its own USD stablecoin PYUSD in 2024 and plans to integrate it into over 20 million merchants by 2025, demonstrating a strong market demand for higher-quality digital dollar payment channels. However, PayPal’s network and similar systems like Visa and ACH still face issues such as fees, transfer limits, processing delays, and geographical restrictions. Under the current system, PayPal merchants face transaction fees of up to 5.4% + $0.30 per transaction, and cross-border payments must contend with exchange rate differences and waiting times. Although PayPal’s stablecoin will reduce the friction costs associated with currency exchange, it remains to be seen whether it will significantly lower merchant fees.

In contrast, Plasma addresses this issue from a crypto-native perspective: it adopts an open infrastructure, with no intermediaries and no “toll” for fund transfers. Anyone with a crypto wallet can easily use Plasma for stablecoin payments, just like using email, without needing a bank account or payment app as an intermediary. This openness and neutrality may attract fintech platforms and even traditional financial institutions to build clearing systems on Plasma, just as the internet’s TCP/IP protocol ultimately became the standard for data transmission.

Plasma 5 billion USD fully diluted valuation (FDV) corresponding valuation multiple

The huge market opportunity of stablecoin payments

The timing of the launch of Plasma is perfect, as the payment market based on stablecoins is not only vast but also rapidly expanding. Currently, the total supply of stablecoins has exceeded $230 billion, accounting for approximately 1.27% of the US M1 money supply and about 1.08% of M2. This may not seem large, but just in January of this year, the supply of stablecoins grew by 14%, and the compound annual growth rate has maintained at 38% since 2018. If this trend continues, the volume of stablecoins may approach the total currency amount of certain G20 countries in a few years.

More significantly, the total volume of stablecoin transfer transactions in 2024 has surpassed several major card networks, second only to the Federal Reserve’s ACH transfer system. This indicates that we are rapidly moving towards a reality where large-scale global capital flows are highly dependent on crypto infrastructure rather than traditional payment channels, although there is still a high level of speculation.

30-day rolling stablecoin trading volume compared to traditional financial solutions

Total supply composition of stablecoins by chain

Although the dominant use of stablecoins is still concentrated in trading and DeFi, the next important growth area is traditional commerce and universal payments. This area covers multiple sectors ranging from remittances (with a market size of about $700 billion per year) to e-commerce payments (which total several trillion dollars globally each year) and B2B cross-border trade (with a scale exceeding $30 trillion). We have already seen stablecoins gradually entering retail and commercial payment scenarios. For example, PayPal highlighted the practical application value of stablecoins during its 2025 Investor Day. The company is working to enable businesses to pay overseas suppliers through PYUSD, thereby avoiding actual fund transfers and completing settlements solely through updates between ledgers. This not only saves merchants processing time and costs but also keeps them within PayPal’s ecosystem — which is crucial, as currently up to 80% of merchant payments immediately leave the PayPal network and transfer to bank accounts.

Consider the merchant payment scenario.

As mentioned earlier, merchants typically incur a fee of 2-3% on each transaction. If stablecoins are used on a zero-fee network, this cost can be nearly eliminated. Assuming the merchant is willing to accept US dollars, or can exchange them for local currency through a cryptocurrency exchange, for example, a Nigerian merchant selling goods to a German customer can settle instantly in US dollar stablecoins via the Plasma network, without having to deal with credit card fees or waiting for international wire transfers to arrive. In fact, Tether recently facilitated a $45 million oil transaction in the Middle East, demonstrating the efficiency of stablecoin settlements to both parties involved.

The global trade market has a scale of over $30 trillion, and the US dollar, as the global settlement currency, has deeply integrated into it, accounting for 80%-90% of global transactions. This is a huge pie, and even if Plasma occupies only a small part of it, it could carry tens of billions of dollars in value transfer every day, thereby creating a strong network effect and gradually becoming irreplaceable.

Value capture without transaction fees: Rethinking the crypto economic model

Given that the core feature provided by Plasma is zero-fee USD₮ transfers, an obvious question arises: how is the value of the network captured? This involves a completely new economic model that prioritizes growth and utility, deferring monetization to indirect channels—similar to how Robinhood rapidly attracted a large number of users and trading activity through “zero-commission trading.”

In traditional smart contract chains, value accumulates through Gas fees (for example, Ethereum’s transaction fees amount to billions of dollars each year, driving the destruction of ETH and staking rewards; Tron also accumulated $1.36 billion in fees within six months). Plasma disrupts this model by foregoing fees on USD₮ transfers, thereby promoting early growth. Its assumption is that a network carrying a large amount of dollar-denominated economic activity will achieve value capture through secondary and tertiary means, rather than charging users for each transaction.

This is similar to the expansion path of free platforms in Web2 - first providing free services to acquire billions of users, and then monetizing in a marginal way. For example, Venmo does not charge for transfers, but generates revenue through services such as credit card payments, instant withdrawals, and cryptocurrency purchases. It is worth noting that even the most mainstream Web2 tools often have a marginal cost of use that is zero.

For Plasma, we believe there are mainly two core value capture mechanisms.

Issuance and Issuer Incentives

Issuers of stablecoins have the motivation to mint and redeem on the chains with the highest activity, which is a significant advantage for Plasma. The deeper stablecoins are integrated into commercial and trade activities, the higher the frequency of minting and redeeming. With millions of transactions every day, even a fee of just 1 cent per transaction will quickly accumulate, generating sustainable network revenue. Furthermore, with the launch of USD₮0 (achieving unified liquidity of USD₮ across multiple chains through LayerZero), Plasma is expected to become the main issuance layer for USD₮.

DeFi + MEV (Maximum Extractable Value)

If the large inflow of BTC and stablecoins attracts DeFi applications to settle in, the entire Plasma ecosystem will prosper accordingly. Standard DEXs, lending platforms, and futures markets all require high-quality assets and collateral. Just as Solana has performed in real economic value (REV) in recent months, activities such as token minting, trading, arbitrage, and liquidation can generate sufficient on-chain activity to support a zero-fee transfer model.

The user base of Plasma is also more “real-world utility” oriented, and they may be more willing to use various fiat stablecoins. We expect that in the coming year, more assets (such as commodities and securities, including public and private markets) will be tokenized, making Plasma more attractive to institutional users.

Moreover, many investors believe that MEV will become a primary value driver of the network in the long term, as it is a core component of permissionless finance. Simply put, MEV can be understood as the premium that people are willing to pay for the priority execution of state changes.

The top five non-stablecoin crypto assets (BTC, ETH, SOL, XRP, BNB) are primarily traded against USD₮, so it can be inferred that,The chain that can gather the most USD₮ activities will also attract more non-native assets to migrate and trade on this chain.Although this trend has not yet fully materialized, considering the monetary network effect (especially USD₮), this idea is not out of reach, particularly for BTC.

Returning to the example of BTC, if more BTC activity occurs on Plasma, it will lead to more sustained network usage, allowing validators and stakers to earn more rewards, rather than relying on periodic Meme coin transactions. For example, in the month with the highest trading volume on Solana (January 2025), the total trading volume on DEX reached $379 billion; during the same period, the trading volume of the BTC/USD₮ spot trading pair on Binance was $144 billion. Since DEX fees depend on the level of network congestion and pool settings, the threshold is low, and the fees are often lower than those of centralized exchanges (the latter has an average transaction fee of about 0.1%). Despite the different mechanisms, the trend of decentralized trading consuming the market share of centralized trading is irreversible, and eventually, most trades will occur in permissionless venues, with MEV playing a crucial role in that.

Most importantly, Plasma amplifies the network effect by eliminating fees.

The history of successful networks tells us that user engagement is the prerequisite for monetization. In the crypto world, the value of a blockchain’s native asset is often a proxy indicator of its community size and activity. If Plasma becomes the center for stablecoin trading, even if USD₮ transfers continue to be free, the value within its ecosystem will still be realized. This model is a long-term strategy: first capture the market, then explore profitability. Moreover, Plasma essentially enhances the utility of the “digital dollar,” naturally aligning with the interests of large capital institutions that aim to promote the globalization of the dollar.

Alignment with U.S. Policy: The Potential of the GENIUS Act

As the adoption of cryptocurrency in the United States matures, compliance is becoming increasingly critical. Now is a good time to align with policy windows and embrace regulatory dividends. Notably, the emergence of Plasma coincides with U.S. lawmakers’ efforts to incorporate stablecoins into the federal regulatory framework.

This week, the U.S. Senate advanced the “U.S. Stablecoin National Innovation Act” (GENIUS Act), a bipartisan bill aimed at establishing a comprehensive federal regulatory framework for stablecoins. If the legislation is successful, the bill will clearly define how to issue and manage U.S. dollar stablecoins under U.S. law, thereby integrating them into the mainstream financial system rather than allowing them to continue existing in a regulatory gray area.

Although the friendly attitude of regulatory agencies under the Trump administration has had a positive impact on the industry, clear cryptocurrency legislation will provide innovators with a long-term predictable policy environment. This is a turning point that financial institutions have long been waiting for, which may clear the obstacles for them to fully embrace stablecoins.

Plasma is naturally aligned with this regulatory trend. It focuses on fiat-backed stablecoins rather than more controversial and complex algorithmic stablecoins. Therefore, once parallel bills like the GENIUS Act or the House’s STABLE Act are passed, Plasma is likely to be one of the first networks to benefit.

It is worth mentioning that U.S. policymakers, who focus on the global dominance of the dollar, may view networks like Plasma as positive assets. By making dollar stablecoins more useful and accessible, Plasma essentially expands the global influence of the dollar in a transparent manner. Compared to domestic and foreign central bank digital currencies (CBDC), the path taken by Plasma, which combines USD₮ liquidity with BTC security, is more likely to be seen as enhancing the power of the “digital dollar.”

Currently, over 98% of the stablecoin market capitalization is backed by the US dollar, and this trend is likely to continue. The GENIUS Act is expected to require stablecoin issuers to comply with strict measures such as reserve requirements, auditing obligations, and redemption policies to protect consumer interests.

Furthermore, the continuous growth of stablecoins, in the context where countries like China may use U.S. Treasury bonds as a tool for geopolitical games, could become an important source of short-term demand for U.S. Treasuries. Although it is still difficult to quantify the direct impact of stablecoins on the yield curve, Tether and Circle have already held over $120 billion of short-term U.S. Treasuries (approximately 3-month maturity), demonstrating that their purchasing power on the short end of the yield curve is stable and sustainable.

https://x.com/paoloardoino/status/1902689997766922318/photo/1

USDT total supply

Future Outlook: The Role of Plasma in Core Financial Infrastructure

The vision of Plasma is to become the core financial infrastructure of the digital age, just as TCP/IP became the core infrastructure of the information age. This vision, while ambitious, is also reasonable. Its goal is not to create a new currency, but to upgrade the circulation of USD₮—the currently dominant digital dollar—globally, further consolidating the dollar’s hegemonic status.

However, this journey has just begun. Plasma needs to prove its safety and reliability in large-scale use cases, attracting a wide range of validators to participate, not just current crypto users, but also new user groups—whether they are individual users, fintech companies, or large institutions. At the same time, Plasma will face competition from existing mainstream platforms, such as Tron, Solana, and various Ethereum layer-two networks, as well as new chains specifically designed for payment scenarios. However, given the global scale of the payment market, this field is large enough to accommodate multiple winners. In an industry where everyone is always chasing the next universal L1 or the next wave of memecoin craze, Plasma’s focus on stablecoin strategy appears pragmatic and clear.

In summary, Plasma is not trying to “reinvent the wheel.” What it does is leverage USD₮—the largest and most liquid dollar stablecoin in the world—and promote its dissemination and popularization globally through a zero-fee transfer mechanism. Stablecoins have proven to be one of the core killer applications in the crypto industry, and this view is not controversial. We believe that the aggregation and dissemination of USD₮ on Plasma will not only enhance the distribution efficiency of USD₮ but also bring about significant secondary and tertiary effects, thereby injecting vitality into further on-chain innovations and economic activities. For all these reasons, we believe that Plasma is poised to occupy an important position in this multi-trillion dollar opportunity.

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