Plasma: A High-Performance Blockchain Designed for Stablecoins

Stablecoins are becoming the core medium for on-chain payments, asset settlement, and financial services. However, the existing blockchain infrastructure has not yet been optimized for their characteristics, resulting in persistent issues such as high transaction costs, performance bottlenecks, and centralization risks.

To address these challenges, Plasma has proposed an innovative solution: to build a high-performance Bitcoin sidechain specifically designed for stablecoins. This chain offers zero-fee transactions, enhanced security, and scalability while being compatible with EVM.

This concept has attracted widespread attention in the market. In February of this year, Plasma announced the completion of a $24 million financing round, with investors including several well-known institutions and individual investors. In addition, an emerging ICO platform has chosen Plasma's initial coin offering as its first product.

The Necessity of a Stablecoin-Specific Blockchain

According to a report released by a research institution earlier this year, it is expected that the annual trading volume of stablecoins will reach $15.6 trillion in 2024, surpassing the transaction scale of the two major credit card companies.

As a key application in the cryptocurrency field, stablecoins play a central role in multiple scenarios, attracting numerous projects and enterprises to accelerate their layouts and build new product ecosystems. Plasma aims to create a high-throughput, scalable dedicated Blockchain with stablecoin infrastructure as its entry point, and become the global settlement and issuance layer for digital dollars.

The Plasma team believes that the mainstream public chains relied upon by current stablecoins have obvious shortcomings: Ethereum's high gas fees make it less than ideal for payment scenarios; while some public chains have gained market share with low fees and fast transactions, their networks are overly centralized, posing security risks.

To address these challenges, Plasma has proposed a new type of blockchain specifically designed for stablecoins. Its plan is to create a sidechain on the Bitcoin blockchain that is fully compatible with the Ethereum Virtual Machine (EVM). This design aims to meet the fundamental needs of decentralized financial activities while leveraging the security of Bitcoin and providing zero-fee stablecoin transactions to fully unlock the potential of the trillion-dollar stablecoin market.

Technical Features and Development Plan

Plasma chose Bitcoin as the foundation for its sidechain primarily because of Bitcoin's unparalleled security and decentralization, which provide an ideal basis for global stablecoin settlements.

In terms of the core consensus mechanism, the Plasma team has independently developed PlasmaBFT, which is evolved from Fast HotStuff, capable of processing thousands of transactions per second, meeting the global stablecoin payment needs for transaction speed. PlasmaBFT is written in Rust and optimized for low end-to-end latency.

Plasma achieves trust-minimized security inheritance by anchoring the state root to the Bitcoin network. This design allows Plasma to reach a security level comparable to Bitcoin without relying on a single validating node or intermediary, thereby reducing the risk of single points of failure or attacks.

The deployment of the Plasma consensus mechanism will occur in three phases, transitioning from an initial controlled phase to a fully decentralized, permissionless model.

To address the pain point of high transaction fees, Plasma has launched a "zero-fee" transfer mechanism for stablecoins. The network adopts a block architecture and is designed with two parallel processing layers, which handle both regular fee transactions and free transactions. To maintain network efficiency, Plasma has also incorporated an order mechanism that includes rate limiting, minimum balance requirements, and replacement strategies.

XPL Token Issuance

XPL is the native coin of the Plasma network, used to maintain consensus and security as well as to serve as fuel for the execution layer. Plasma states that the XPL coin plays a central role in the system, not only ensuring the security of the PlasmaBFT consensus mechanism and supporting EVM execution based on Reth, but also underpinning a minimally trusted Bitcoin bridge.

The public sale of XPL will be conducted on the Plasma official website. Participants need to complete compliance processes such as KYC identity verification and jurisdiction screening. Pre-registration will open on June 9, and the actual sale will begin a few weeks later. The number of units for each participant corresponds to a guaranteed allocation amount, and XPL can be purchased using various stablecoins. This round of public fundraising plans to sell 10% of the total amount of XPL, corresponding to a fully diluted valuation of 500 million dollars.

The issuance process is divided into three stages: deposit, lock-up, and token distribution. In the deposit stage, participants deposit stablecoins into the Plasma Vault on Ethereum, accumulating "units" to determine the guaranteed allocation share of XPL. The lock-up period lasts for at least 40 days, during which no deposits or withdrawals are allowed. When the Plasma mainnet Beta goes live, participants will receive the corresponding allocated XPL tokens.

This public offering is only open to qualified regions and has strict compliance requirements. U.S. users face additional restrictions, including accredited investor verification and a 12-month lock-up period. Plasma emphasizes that the structure of this issuance reflects the core values of its network: encouraging long-term participation, maintaining aligned interests, and enhancing transparency to ensure that early contributors can fairly share in the benefits of network growth.