Sneak Peek
· Plasma is not just a stablecoin chain, but also a Bitcoin sidechain and privacy solution.
· Tether is likely to launch native USDT on the Plasma chain, enabling low-slippage Bitcoin exchange and minimized trust 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 banking 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 designed for Bitcoin, supporting stablecoins and treating them as a fundamental base. 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 constructing a settlement layer natively supporting Bitcoin and denominated in US dollars.
Supported by Peter Thiel, Tether, and Bitfinex under Paolo Ardoino, the project integrates three emerging technological 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, reducing trust dependency assumptions, and inheriting Bitcoin's security model.
Plasma chain technology is highly likely to lead a new wave of BTCFi, as it unlocks 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 trust minimization mechanism (supported by BitVM2).
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 currently absent in the Bitcoin mainnet itself.
Unlike other Layer 2 and sidechains requiring 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 solution after BitVM2's 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 and user experience. Unlike ZK privacy solutions (such as ZCash, 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 functionality, allowing users to prove specific transaction details when needed (e.g., to exchanges, auditors, or compliance platforms) without exposing entire on-chain activities. This privacy system ensures 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 through 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 USD exposure), USDT-based products might receive strong foundational pull. With Circle's IPO refocusing market attention on stablecoins, assets linked to Tether's infrastructure are expected 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 fiat conversion channels through banking partnerships and custodian institutions 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 could support a $500 million fully diluted valuation (FDV).
The financial layer built on Bitcoin, Plasma, provided with liquidity startup by Tether and enhanced with native privacy features, can achieve goals that other cryptocurrency projects find difficult to reach.
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