Plasma, Tether's trillion-dollar stablecoin ambition

The "industrial revolution" of stablecoins, Plasma injects new blood into the on-chain with USDT.

Written by: Kairos Research

Compiled by: BUBBLE, BlockBeats

Plasma is a blockchain that supports only stablecoins, redefining payment infrastructure with zero fees, Bitcoin-level security, and a vision aimed at mainstream finance. Kairos Research is an investor in Plasma. Information provided by Kairos Research, including but not limited to research, analysis, data, or other content, is for reference only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. Kairos Research does not recommend the purchase, sale, or holding of any cryptocurrency or other investment assets.

###The Rise of Stablecoins and the Necessity of Dedicated Infrastructure

Stablecoins have rapidly evolved from a niche application into one of the most significant innovations in the cryptocurrency market, also becoming an emerging medium for global payments. In 2024 alone, dollar-pegged stablecoins represented by Tether's USDT processed up to $15.6 trillion in transaction volume, equivalent to 119% of Visa's payment volume during the same period. Additionally, recent data shows that USDT has around 400 million users in emerging markets. This surge signals the arrival of the "stablecoin singularity": digital dollars flow freely like information, reshaping the way money moves.

We believe that the comprehensive integration of 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 intermediaries that charge high fees and can even freeze funds at any time. However, current mainstream blockchains are not optimized for stablecoins, leading to high transaction fees on networks like Ethereum, forcing users to turn to more centralized and slightly cheaper alternatives like Tron.

That's where Plasma comes in, a blockchain built for stablecoins. Plasma focuses on one thing: making transfers of stablecoins like USD₮ fast and free. Unlike generic L1 chains, which attempt to support multiple applications at the same time, Plasma's focus on stablecoin payments, unlocking benefits on a technical and economic level, promises to become the standard payment layer for the global digital dollar. Since its functionality is limited to stablecoin payments, Plasma maximizes throughput and minimizes latency while completely eliminating transaction fees for USD₮ users. The ultimate goal is to make the transfer experience as simple and smooth as texting, but with potentially far-reaching secondary and tertiary impacts.

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

Although Ethereum is currently the blockchain with the largest issuance of stablecoins, its architecture makes stablecoin transaction fees high, often requiring several dollars per transfer, which has pushed many users to switch to the Tron network, which has lower transfer fees. Tron seized on this demand and promoted its low-cost trading model in emerging markets. According to Artemis, Tron processed about ₮5.46 trillion in USD₮ transfers in 2024 with 750 million transactions. If Tron's rise has relied on low fees, Plasma's "zero-fee" model takes it a step further, allowing applications to skip the hassle of paying for gas, potentially triggering a wave of even larger adoption.

For users, "zero fees" not only saves money, but also inspires new use cases: micropayments become viable when sending $5 no longer requires a $1 fee. Cross-border remittances can also be fully received without being charged high fees by intermediaries. Merchants can collect stablecoin payments without ceding 2-3% of transaction volume to invoicing and credit card networks. In short, Plasma's free transfers break down the barriers that previously limited stablecoins to transaction scenarios, opening the way for daily consumption scenarios. Thanks to the support of the Tether ecosystem, the incentive mechanism of Plasma is perfectly aligned with the promotion of USD₮. Liquidity attracts more liquidity, and once users realize that value can be freely transferred on Plasma, it could attract stablecoin flows from across the crypto market, further cementing its position as the preferred channel for the digital dollar.

In addition, the growing USD₮ deposits and native issuance capabilities on Plasma make it an ideal extension ecosystem for existing DeFi protocols. Stablecoin-focused protocols such as Curve and Ethena have announced plans to deploy to EVM-compatible plasma networks. At the same time, the network effect of USD₮ as a mainstream stablecoin makes it the default pricing unit for Bitcoin spot pairs on mainstream exchanges. For example, since August 2017, the cumulative volume of the BTC/USD₮ trading pair on Binance has reached ₮4.9 trillion. As BTC's cross-chain bridge technology matures and trust assumptions decrease, we believe that more liquid bitcoins will enter the plasma network in the future, creating synergies with the familiar pairing of USD₮ and potentially spurring more trading activity, especially when users align centralized exchanges and on-chain BTC prices through arbitrage.

###Fully Surpassing Ethereum, Tron, and Traditional Payment Tracks

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

Ethereum: Ethereum has a diverse DeFi ecosystem, but at the cost of tight block space and high Gas fees, even a simple USD₮/USDC transfer can cost several dollars. Stablecoins, while having started on Ethereum and accounting for a significant amount of on-chain usage (about 35-50%), are mainly for large transactions, often excluding small users. While Layer-2 Rollups help reduce costs, Plasma's approach is more radical - a chain built specifically for stablecoins, optimized for speed and cost from the ground up. Since it does not need to "support everything", Plasma can dedicate all resources to the processing of stablecoin transfers, thus avoiding congestion issues on generalized chains.

Tron: Tron has become the main network for stablecoins, capturing a large trading volume from Tether, thanks to its low fees and faster confirmation speed. The cumulative transfer volume of Tron’s TRC-20 USDT 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 paying $2-3 or even staking TRX to obtain free or discounted transactions, Plasma completely waives the fees for USDT transfers.

In addition, Tron’s DPoS architecture has long been criticized for being overly centralized, with only 27 "semi-permissioned" validation nodes, and its network relies on the native token for transaction fees and governance. In contrast, Plasma employs Bitcoin-level security mechanisms, allowing fees to be paid in stablecoin itself (if necessary), which is undoubtedly a more user-friendly design. If Tron is currently the "stablecoin chain", then Plasma is preparing to surpass it with a better user experience and economic model.

PayPal vs. traditional financial payment channels: Traditional payment processors and fintech platforms are also actively focusing on the development of stablecoins. PayPal launched its own USD stablecoin, PYUSD, in 2024 and plans to integrate it into more than 20 million merchants by 2025, demonstrating a strong demand for a better digital dollar payment gateway. However, PayPal's network and similar systems such as Visa and ACH still have problems with fees, transfer limits, processing delays and geographical restrictions. Under the current system, PayPal merchants can charge up to 5.4% + $0.30 per transaction, and cross-border payments are subject to exchange rate differences and waiting times. While PayPal's stablecoin will reduce the frictional costs associated with currency conversion, it remains to be seen whether merchant fees will be significantly reduced.

In contrast, Plasma solves this problem with a crypto-native perspective: it uses an open infrastructure, no intermediaries, and no "tolls" to transfer funds. Anyone with a crypto wallet can make stablecoin payments with Plasma as easily as they can with email, without the need for 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 top of Plasma, just as the Internet's TCP/IP protocol eventually became the standard for data transmission.

Plasma 500 million USD fully diluted valuation (FDV) corresponds to the valuation multiple

###Huge market opportunity for stablecoin payments

The timing of the launch of Plasma is nothing short of perfect, as the payment market based on stablecoins is not only massive but also expanding rapidly. Currently, the total supply of stablecoins has surpassed 230 billion USD, accounting for about 1.27% of the US M1 money supply and approximately 1.08% of M2. This may not seem significant, but just this January, the supply of stablecoins grew by 14%, and the compound annual growth rate has been maintained at 38% since 2018. If this trend continues, the volume of stablecoins could approach the total currency amounts of certain G20 countries in a few years.

More tellingly, the total volume of transfer transactions for stablecoins in 2024 has already surpassed that of multiple major card networks, second only to the Federal Reserve's ACH transfer system. This suggests that we are fast 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 degree 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, from remittances (with a market size of about $700 billion per year) to e-commerce payments (worth trillions of 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 emphasized the practical application value of stablecoins at its Investor Day in 2025. The company is working to encourage businesses to pay overseas suppliers using PYUSD, thereby avoiding actual fund transfers and completing settlements solely through updates between ledgers. This not only saves merchants' processing time and fees but also keeps merchants within the PayPal ecosystem—this is crucial because currently up to 80% of merchant payments immediately flow out of the PayPal network into bank accounts after being received.

####Consider merchant payment scenarios.

As mentioned earlier, merchants typically lose 2-3% in transaction fees for each transaction. If stablecoins are used on a zero-fee network, this cost can be nearly eliminated. Assuming the merchant is willing to accept USD, or can exchange it for local currency through a cryptocurrency exchange, for example, a merchant in Nigeria selling goods to a customer in Germany can directly settle in USD stablecoin via the Plasma network in real-time, 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 trade in the Middle East, showcasing the efficiency of stablecoin settlements to both parties involved.

The global trade market size exceeds 30 trillion USD, with the USD deeply integrated as the global settlement currency, accounting for 80%-90% of global transactions. This is a huge cake, and even if Plasma only occupies a small portion of it, it has the potential to carry tens of billions of USD in value transfer daily, thereby creating a strong network effect and gradually becoming indispensable.

####Value capture without fees: Rethinking the crypto economic model

Given that the core function provided by Plasma is zero-fee USDT transfers, an obvious question arises: how is the value of the network captured? This involves a completely new economic model that prioritizes growth and practicality, 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 is accumulated through gas fees (e.g., Ethereum's billions of dollars per year in fees, which drive ETH burning and staking yields; Tron has also amassed $1.36 billion in fees in six months). Plasma, on the other hand, has reversed this model by ditching fees for USD₮ transfers to drive early growth. The assumption is that a network that carries a lot of dollar-denominated economic activity will capture value through second- and third-tier means, rather than charging users for each transaction.

It's also similar to Web2's free platform expansion path – offering free services to reach billions of users and then monetizing them at the edge. Venmo, for example, doesn't charge for transfers, but earns revenue from businesses such as credit card payments, instant withdrawals, and cryptocurrency purchases. It's worth reminding that even the most mainstream Web2 tools often have zero marginal cost of use.

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

####issuance and issuer incentives

The issuer of the stablecoin has the motivation to mint and redeem on the most active chain, which is a significant advantage for Plasma. The deeper the stablecoin is integrated into business and trade activities, the higher the frequency of minting and redeeming. With millions of transactions daily, even if each transaction incurs only a 1 cent on-chain fee, it will quickly accumulate, forming 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 massive inflow of BTC and stablecoins attracts DeFi applications to settle in, the entire Plasma ecosystem will also prosper. Standard DEXs, lending platforms, and futures markets all require high-quality assets and collateral. Just as Solana has performed in terms of 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 free transfer model.

The user base of Plasma is also more "real-world utility", and they may be more willing to use multiple 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.

In addition, many investors believe that MEV will become a major value driver for 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₮ activity will also attract more non-native assets to migrate to this chain for trading. ** Although this trend has not yet fully materialized, considering the network effect of currencies (especially USD₮), this idea is not far-fetched, especially for BTC.

Going back to the BTC example, if more BTC activity takes place on Plasma, it will lead to more sustained network usage, allowing validators and stakers to earn more instead of relying on periodic meme coin transactions. For example, in Solana's most traded month (January 2025), the total DEX volume reached $379 billion; The BTC/USD₮ spot trading pair on Binance traded ₮144 billion over the same period. Since DEX fees depend on the level of network congestion and pool setup, the barrier to entry is lower and tends to be lower than that of centralized exchanges (where the average fee is around 0.1%). Despite the different mechanisms, the trend of decentralized transactions eating up the share of centralized transactions is irreversible, and eventually most transactions will take place in permissionless venues, where MEV will play a key role.

####The most important thing is that Plasma amplifies the network effect by eliminating transaction 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 the size and activity of its community. If Plasma becomes the center for stablecoin trading, even if USDT transfers remain free, the value within its ecosystem will still be reflected. This model is a long-term strategy: first occupy the market, then explore profitability. Moreover, Plasma essentially enhances the practicality of "digital dollars," naturally aligning with the interests of large capital institutions that aim to promote the globalization of the dollar.

####Aligning with US Policy: The Potential of the GENIUS Act

As the adoption of cryptocurrency in the United States matures, compliance is becoming increasingly critical, and now is the right time to align with policy windows and embrace regulatory benefits. It is especially noteworthy that the emergence of Plasma coincides with U.S. legislators' efforts to incorporate stablecoins into the federal regulatory framework.

This week, the U.S. Senate moved forward with the U.S. Stablecoin National Innovation Guidance Act (GENIUS Act), a bipartisan bill that seeks to establish a comprehensive federal regulatory system for stablecoins. If successful, the bill will clearly define how to issue and manage USD stablecoins under U.S. law, thereby integrating them into the mainstream financial system, rather than continuing to exist as a regulatory grey zone.

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 the turning point that financial institutions have been waiting for, which may clear the obstacles for them to fully embrace stablecoin.

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

It is worth mentioning that American policymakers, who focus on the global dominance of the US dollar, may view networks like Plasma as positive assets. By making USD stablecoins more useful and accessible, Plasma effectively expands the global influence of the dollar in a transparent manner. Compared to domestic and foreign Central Bank Digital Currencies (CBDCs), the path taken by Plasma with USD₮ liquidity + BTC security is more likely to be seen as enhancing the power of the "digital dollar."

Currently, over 98% of the market value of stablecoins is backed by USD, 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, against the backdrop of countries like China potentially using US Treasuries as a tool for geopolitical games, may become an important source of short-term demand for US Treasuries. Although it is currently difficult to quantify the direct impact of stablecoins on the yield curve, Tether and Circle have already held over 120 billion USD in short-term US Treasuries (approximately 3-month maturity), proving that their purchasing power on the short end of the yield curve is stable and sustainable.

Total Supply of USDT

###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 dominant position.

However, the journey has only just begun. Plasma needs to prove its security and reliability in large-scale use cases, attracting a wide range of validators, not just current crypto users, but also new user groups – whether individual users, fintech companies, or large institutions. At the same time, Plasma will also face competition from existing mainstream platforms such as Tron, Solana, and various Ethereum layer 2 networks, as well as new chains built for payment scenarios. But given the global scale of the payments market, the space is far enough to accommodate multiple winners. In an industry where everyone is always chasing the next generic L1 or the next wave of memecoin craze, Plasma's strategy of focusing on stablecoins is 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 globally—and promote its dissemination and adoption worldwide through a zero-fee transfer mechanism. Stablecoins have proven to be one of the core killer applications of the crypto industry, and this viewpoint 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, injecting vitality into further on-chain innovation and economic activities. For all these reasons, we believe Plasma is poised to occupy an important position in this multi-trillion-dollar opportunity.