Plasma, Tether's Trillion-Dollar Stablecoin Ambition

Original Title: Plasma: The Stablecoin Singularity
Original Author: Kairos Research
Translation by: BUBBLE, BlockBeats

Plasma is a blockchain network designed solely for stablecoins, aiming to redefine payment infrastructure with zero fees, Bitcoin-level security, and a vision oriented toward mainstream finance. Kairos Research is an investor in Plasma. The information provided by Kairos Research, including but not limited to research, analysis, data, or other content, is for informational purposes only and does not constitute investment, financial, trading, or any other type of advice. Kairos Research does not endorse the purchase, sale, or holding of any cryptocurrency or other investment assets.

The Rise of Stablecoins and the Need for Dedicated Infrastructure

Stablecoins have rapidly evolved from a niche application to one of the most significant innovations in the crypto market, emerging as a new medium for global payments. In 2024 alone, dollar-pegged stablecoins such as Tether's USD₮ processed as much as $15.6 trillion in transaction volume, which is equivalent to 119% of Visa's payment volume during the same period. Furthermore, recent data shows that USD₮ boasts approximately 400 million users in emerging markets. This surge signals the arrival of the "stablecoin singularity": digital dollars flowing freely like information, reshaping the way money moves.

We believe that fully integrating stablecoins into every aspect of the global payment system—including P2P, B2B, and P2B transactions—has the potential to significantly improve people's daily lives. Ideally, blockchain technology can drastically reduce payment settlement times by bypassing intermediaries that charge hefty fees and, in some cases, freeze funds at their discretion. However, mainstream blockchains today are not optimized for stablecoins, leading to high transaction fees on networks like Ethereum. As a result, users often turn to alternative options like Tron, which offer slightly lower fees but are more centralized.

This is where Plasma steps in—a blockchain network custom-built for stablecoins. Plasma focuses on one thing: enabling fast, free transfers of stablecoins such as USD₮. Unlike general-purpose Layer 1 chains that attempt to support a wide variety of applications, Plasma zeroes in on stablecoin payments, unlocking technical and economic advantages that position it to become the standard payment layer for global digital dollars. By limiting its functionality to stablecoin payments, Plasma is able to maximize throughput, minimize latency, and offer USD₮ users completely fee-less transactions. The ultimate goal is to achieve a transfer experience as seamless and straightforward as sending a text message, with the potential for far-reaching secondary and tertiary effects.

Zero-Fee USD₮ Transfers: The Liquidity Power Magnet

While Ethereum currently hosts the largest issuance of stablecoins, its architecture leads to high transaction fees for stablecoin transfers, often costing several dollars per transaction. This dynamic has driven many users toward the Tron network, which offers much lower transfer fees. Tron capitalized on this demand by promoting its low-cost transactional model in emerging markets. According to Artemis data, Tron processed approximately $5.46 trillion in USD₮ transfer volume across 750 million transactions in 2024. If Tron's rise has been powered by its low-fee advantage, Plasma's "zero-fee" model takes it a step further. By allowing applications to bypass Gas fees entirely, Plasma could potentially ignite a much larger wave of adoption.

For users, "zero fees" aren't just about saving money; they also unlock new use cases. When sending $5 no longer requires paying a $1 fee, micropayments become viable. Cross-border remittances can finally arrive in full without intermediaries skimming a large share. Merchants can accept stablecoin payments without surrendering 2-3% of transaction values to invoicing and credit card networks. Simply put, Plasma's fee-free transfers break the previous barriers that confined stablecoins to trading scenarios, opening up pathways for everyday use cases. Bolstered by the Tether ecosystem's support, Plasma's incentives align perfectly with the promotion of USD₮. Liquidity attracts more liquidity—once users realize they can freely transfer value on Plasma, it could draw stablecoin flows from across the entire crypto market, further cementing its status as the preferred channel for digital dollars.

Moreover, Plasma's growing USD₮ deposits and native issuance capabilities position it as an ideal expansion ecosystem for existing DeFi protocols. Stablecoin-centric protocols like Curve and Ethena have already announced plans to deploy on the EVM-compatible Plasma network. Meanwhile, USD₮'s network effects as a mainstream stablecoin solidify its role as the default pricing unit for major exchange Bitcoin spot pairs. For instance, since August 2017, the BTC/USD₮ trading pair on Binance has accumulated a total volume of $4.9 trillion. As cross-chain BTC bridging technology continues to mature and trust assumptions decrease, we foresee larger amounts of highly liquid Bitcoin entering the Plasma network. Combined with USD₮ pairings, this synergy could spark further trading activity, particularly as users engage in arbitrage to align centralized exchange and on-chain BTC prices.

Surpassing 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 boasts a diverse DeFi ecosystem, but this comes at the cost of congested block space and exorbitant gas fees. Even a simple USD₮/USDC transfer can cost several dollars. Stablecoins might have originated and garnered significant on-chain usage on Ethereum (accounting for about 35-50%), but they are primarily used for large transactions, often excluding smaller users. While Layer-2 Rollups help reduce fees, Plasma adopts a more radical approach—developing a dedicated chain for stablecoins. Its underlying architecture is optimized for speed and cost from the ground up. By focusing solely on stablecoin transfers, Plasma allocates all its resources to streamline transaction processing, effectively avoiding the congestion issues seen on general-purpose chains.

Tron: Tron has become a dominant network for stablecoins, supporting massive Tether transaction volumes thanks to its low fees and faster confirmation times. The cumulative transfer volume of TRC-20 USD₮ on Tron has reached 22 billion transactions, far surpassing Ethereum's ERC-20 with 2.6 billion transactions. This highlights that a superior user experience (particularly low cost and fast transactions) can significantly boost market adoption. However, Plasma takes the user experience to a new level: while Tron users still need to pay $2-3 per transaction or stake TRX to gain free or discounted transactions, Plasma offers completely fee-free USD₮ transfers.

Additionally, Tron's DPoS architecture has long been criticized for being overly centralized, with only 27 “semi-permissioned” validator nodes. Moreover, its network relies on its native token for fee payments and governance. In contrast, Plasma employs Bitcoin-level security mechanisms and supports the payment of fees (if needed) using the stablecoin itself, making it undoubtedly more user-friendly. If Tron is currently the “stablecoin chain,” then Plasma is poised to surpass it with a superior user experience and economic model.

https://gasfeesnow.com/

PayPal and Traditional Payment Rails: Traditional payment processors and fintech platforms are also paying close attention to stablecoin developments. PayPal launched its proprietary USD stablecoin, PYUSD, in 2024 and plans to integrate it into over 20 million merchants by 2025, signifying strong market demand for better digital dollar payment channels. However, PayPal's network—and similar systems like Visa and ACH—still suffer from issues such as fees, transfer limits, processing delays, and geographic restrictions. In the current system, PayPal merchants face fees of up to 5.4% + $0.30 per transaction, while cross-border payments are subject to currency conversion spreads and waiting times. Despite PayPal’s stablecoin reducing currency exchange-related friction costs, whether it will significantly lower merchant transaction fees remains to be seen.

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

Plasma’s $500 million fully diluted valuation (FDV) valuation multiple

Massive Market Opportunity for Stablecoin Payments

The launch timing of Plasma is impeccable, as the stablecoin-based payments market is not only massive but also rapidly expanding. Currently, the total supply of stablecoins has exceeded $230 billion, accounting for approximately 1.27% of the U.S. M1 money supply and around 1.08% of M2. While this might seem small, stablecoin supply grew by 14% in just January this year, and has maintained a compound annual growth rate (CAGR) of 38% since 2018. If this trend continues, the stablecoin market could approach the total monetary supplies of some G20 countries within a few years.

Even more illustrative is the fact that, by 2024, the total amount transacted using stablecoins has already surpassed several major card networks, trailing only the Fed’s ACH transfer system. This indicates that we are rapidly moving toward a global reality where large-scale capital flows rely heavily on crypto infrastructure rather than traditional payment channels (despite the continued speculative nature of the space).

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

Stablecoin total supply composition by blockchain

Although the dominant use case for stablecoins today is still concentrated in trading and DeFi, the next major growth area lies in traditional commerce and general-purpose payments. This includes segments like remittances (a market worth approximately $700 billion annually), e-commerce payments (several trillion dollars globally per year), and B2B cross-border trade (exceeding $30 trillion in scale). We’re already seeing stablecoins gradually enter retail and commercial payment scenarios. For example, PayPal highlighted the real-world utility of stablecoins at its 2025 investor day. The company is actively encouraging businesses to pay overseas suppliers using PYUSD, avoiding the need for actual funds transfers and instead settling via ledger updates. This not only saves merchants time and processing costs but also retains them within PayPal's ecosystem—a critical advantage given that up to 80% of merchant payments currently exit PayPal and move into bank accounts immediately after settlement.

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Consider Merchant Payment Scenarios

As mentioned above, merchants often lose 2-3% of the transaction value as processing fees for each trade. If stablecoins were used on a zero-fee network, this cost could almost be eliminated. Suppose the merchants are willing to accept USD, or they can convert it into local currency through a crypto exchange. In that case, for example, a Nigerian merchant selling goods to a German customer could directly settle in real time using USD stablecoins on the Plasma network, avoiding credit card fees or waiting for international wire transfers. In fact, Tether recently facilitated a $45 million Middle Eastern crude oil deal, showcasing the efficiency of stablecoin settlements to both parties involved.

The global trade market is valued at over $30 trillion, with the USD deeply embedded as the global settlement currency, accounting for 80%-90% of all global transactions. This represents an enormous opportunity; even if Plasma captures a small fraction of this market share, it could facilitate value transfers worth billions of dollars daily, establishing strong network effects that may render it indispensable over time.

Value Capture in a Zero-Fee Model: Rethinking Crypto Economic Structures

Given that Plasma's core feature is zero-fee USD₮ transfers, an obvious question arises: How does the network capture value? This calls for an entirely new economic model, with a primary focus on growth and utility, deferring monetization to indirect channels—similar to how Robinhood attracted massive user adoption and trading activity through "zero-commission trading."

In traditional smart contract chains, value is captured via gas fees (e.g., Ethereum accumulates transaction fees worth billions of dollars annually, driving ETH burn and staking returns; Tron generated $1.36 billion in fees within six months). However, Plasma disrupts this model by eliminating fees for USD₮ transfers, prioritizing early-stage growth instead. The assumption is that a network hosting extensive USD-denominated economic activities will eventually capture value through secondary and tertiary mechanisms, rather than by charging users a fee for every transaction.

This is reminiscent of the free platform expansion strategy seen in Web2—offering free services to attract billions of users first, then monetizing via peripheral channels. For example, Venmo does not charge fees for transfers but generates revenue via credit card payments, instant withdrawals, and cryptocurrency purchases. It’s worth noting that even the most mainstream Web2 tools often have zero marginal usage costs.

For Plasma, we identify two primary mechanisms for core value capture

Issuance and Issuer Incentives

Stablecoin issuers are incentivized to mint and redeem on the most active chains, which is a significant advantage for Plasma. The deeper stablecoins integrate into commercial and trade activities, the higher the frequency of minting and redemption. With millions of transactions occurring daily, even collecting a chain fee of just 1 cent per transaction can quickly accumulate into sustainable network revenue. Additionally, with the launch of USD₮0 (enabled by LayerZero to achieve unified liquidity for USD₮ across multiple chains), Plasma is well-positioned to become the primary issuance layer for USD₮.

DeFi + MEV (Maximum Extractable Value)

If large inflows of BTC and stablecoins attract DeFi applications to migrate, the entire Plasma ecosystem will flourish as a result. Standard DEXs, lending platforms, and futures markets all require high-quality assets and collateral. Similar to Solana's recent performance in terms of Real Economic Value (REV), activities like token minting, trading, arbitrage, and liquidation can generate sufficient on-chain activity to sustain a free transfer model.

Plasma's user base also leans more toward "real-world utility," potentially making them more inclined to use multiple fiat-backed stablecoins. We anticipate that over the next year, more assets (such as commodities and securities, including public and private market assets) will be tokenized, making Plasma increasingly attractive to institutional users.

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

The top five non-stablecoin crypto assets (BTC, ETH, SOL, XRP, BNB) currently see their major trading pairs denominated in USD₮. Accordingly, **the chain that captures the most USD₮ activity is likely to attract more non-native assets to migrate for trading on that chain.** While this trend has not fully materialized, the idea is not far-fetched given the monetary network effects — especially surrounding USD₮. This is particularly relevant in the context of BTC.

Returning to the BTC example, if more BTC activity occurs on Plasma, it would lead to more consistent network usage, enabling validators and stakers to earn greater rewards rather than relying on cyclical Meme coin trading. For example, during Solana's highest-volume trading month (January 2025), the total DEX trading volume reached $379 billion, while Binance's BTC/USD₮ spot trading pair recorded $144 billion in volume during the same period. Since DEX fees depend on network congestion and pool configurations, they typically have lower barriers and fees than centralized exchanges (where average trading fees hover around 0.1%). Despite differing mechanisms, the trend of decentralized exchanges eating into the market share of centralized exchanges is irreversible. Over time, the majority of trading will likely occur in permissionless venues, with MEV playing a critical role in this transition.

Most importantly, Plasma amplifies network effects with zero transaction fees.

The history of successful networks tells us that user adoption is a prerequisite for monetization. In the crypto world, the value of a blockchain's native asset is often a proxy for the size and activity of its community. If Plasma becomes the hub for stablecoin transactions, even if USD₮ transfers remain free, the value within its ecosystem will still emerge. This model reflects a long-term strategy: capture the market first, then explore monetization. Moreover, Plasma effectively enhances the utility of "digital dollars," naturally aligning with the interests of large capital institutions aiming to promote the globalization of the US dollar.

Alignment with US Policy: The Potential of the GENIUS Act

As cryptocurrency adoption in the US matures, compliance is becoming increasingly critical. Now is the time to seize the policy window and embrace the regulatory dividends. Particularly noteworthy is that Plasma's emergence coincides with US lawmakers striving to bring stablecoins under a federal regulatory framework.

This week, the US Senate advanced the "Government-Endorsed National Stablecoin Innovation and Uniform Standards Act" (GENIUS Act), a bipartisan bill aimed at creating a comprehensive federal oversight framework for stablecoins. If successfully enacted, this legislation would establish clear guidelines for issuing and managing dollar-backed stablecoins under US law, integrating them into the mainstream financial system instead of relegating them to regulatory limbo.

While the friendly regulatory stance under the Trump administration already had a positive impact on the industry, explicit crypto legislation will provide innovators with a long-term, predictable policy environment. This represents a pivotal moment financial institutions have long awaited and could clear the path for their full embrace of stablecoins.

Plasma is naturally aligned with this regulatory trend. It focuses on fiat-backed stablecoins rather than the more contentious and complex algorithmic stablecoins. Therefore, should the GENIUS Act or parallel legislation like the House's STABLE Act pass, Plasma is likely to be among the networks benefiting first.

It is worth noting that US policymakers concerned with maintaining the global dominance of the dollar might view networks like Plasma as strategic assets. By making dollar stablecoins more functional and accessible, Plasma effectively extends the dollar's global influence in a transparent way. Compared to central bank digital currencies (CBDCs) developed domestically or abroad, Plasma's approach—USD₮ liquidity combined with BTC-level security—is more likely to be regarded as bolstering the strength of the "digital dollar."

Currently, over 98% of the stablecoin market capitalization is backed by the US dollar, a trend that is likely to persist. The GENIUS Act is expected to enforce strict measures for stablecoin issuers, such as reserve requirements, auditing obligations, and redemption policies, to protect consumer interests.

Furthermore, the continued growth of stablecoins, particularly against the backdrop of countries like China potentially leveraging US Treasury bonds as tools in geopolitical maneuvers, might become a significant source of demand for short-term US Treasuries. While it is currently difficult to quantify the direct impact of stablecoins on the yield curve, Tether and Circle have collectively held over $120 billion in short-term US Treasuries (approximately 3-month maturities), demonstrating their stable and sustainable purchasing power on the short end of the yield curve.

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

Total USDT Supply

Future Outlook: Plasma’s Role in Core Financial Infrastructure

Plasma’s vision is to become the core financial infrastructure of the digital age, much like TCP/IP became the backbone of the information era. This vision is ambitious but not unreasonable. Its objective is not to create a new currency but to enhance the global circulation of USD₮—the current dominant digital dollar—thereby further solidifying the dollar’s hegemonic status.

However, this journey is just beginning. Plasma must prove its security and reliability under large-scale use cases, while attracting a broad spectrum of validators—not limited to current crypto users, but also inclusive of new user segments, such as individual users, fintech companies, and large institutions. Meanwhile, Plasma will face competition from established mainstream platforms like Tron, Solana, and various Ethereum Layer 2 networks, as well as new chains tailored specifically for payment scenarios. That being said, considering the global scale of the payments market, this sector is large enough to accommodate multiple winners. In an industry perpetually chasing the next universal L1 or the next memecoin craze, Plasma’s focus on stablecoins appears pragmatic and laser-focused.

In essence, Plasma is not attempting to “reinvent the wheel.” What it seeks to do is leverage USD₮—the world’s largest and most liquid dollar-pegged stablecoin—and enable its global dissemination through a zero-fee transfer mechanism. Stablecoins have already proven to be one of the crypto industry's core killer apps, a consensus that is hardly contested. We believe that USD₮'s aggregation and distribution on Plasma will not only improve its efficiency in reaching global markets but also generate significant secondary and tertiary effects, thereby fostering further innovation and economic activity on-chain. For these reasons, we believe Plasma is well-positioned to capture a substantial share of this multi-trillion-dollar opportunity.