Author: Sam, Messari Analyst
Translated by: Tim, PANews
PANews Editor's 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 quota 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 Exclusive to Stablecoins: What Makes Plasma Different After Raising Over $24 Million?, which readers can refer to.
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 demand.
- Similar to Circle's payment network, Plasma serves as a payment network with bank partners and custodians, supporting USDT's fiat off-ramp channels.
Plasma is often simplified as a "stablecoin chain". While this understanding is not wrong, it misses the key point. What Plasma is truly building is a financial infrastructure layer specifically for Bitcoin, supporting stablecoins as a foundational layer. It is a Bitcoin sidechain that provides native USDT support, protocol-level privacy protection, and a Gas model that does not require users to hold highly volatile governance tokens. This is not just about payment functionality, but about building a native Bitcoin settlement layer priced in US dollars.
The project is supported by Peter Thiel, Tether, and Bitfinex, led by Paolo Ardoino, and integrates three major emerging technology trends: Bitcoin Rollup technology, stablecoin infrastructure, and on-chain privacy protection. Each concept is individually investment-worthy, 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, reducing trust dependency assumptions, and inheriting Bitcoin's security model.
Plasma technology is likely to lead a new wave of BTCFi by unlocking 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 BitVM2).
With Tether's direct endorsement, Plasma gains access to one of the most liquid 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 requiring Bitcoin wrapping or custody bridges, Plasma builds a dedicated Bitcoin cross-chain bridge, operating through a permissionless validator mechanism and promising to adopt the BitVM2 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) requiring 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 (e.g., to exchanges, auditors, or compliance platforms) without exposing all on-chain activities. This privacy system preserves individual control while achieving interoperability with regulatory frameworks.
Crucially, Plasma technology allows users to trade without holding or using highly 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, but 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. First, market-driven: as stablecoin demand grows (especially for global users seeking USD exposure), USDT-based products may receive 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 the Circle payment network but serves the Tether ecosystem. The system will have complete anti-money laundering capabilities to support enterprise entry, integrating with bank partners and custodian institutions to enable 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 the Circle payment network, I believe 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.
