Original Author: @BlazingKevin_, the Researcher at Movemaker

TL;DR

• Core Positioning: Plasma is a Bitcoin sidechain supported by Tether, aimed at becoming the ultimate settlement layer for USDT and Bitcoin.
• Business Motivation: The core goal of Plasma is to help Tether reclaim billions of dollars in USDT transaction fees lost annually to public chains like Ethereum and Tron, achieving a strategic upgrade from "stablecoin issuer" to "global payment infrastructure."
• Technical Strategy: Robust Combination: Plasma does not pursue high-risk new technologies but integrates mature solutions that have been validated in the industry:
• USDT Optimization: Utilizing "account abstraction" technology (Paymaster) to achieve zero-fee transfers of USDT.
• BTC Support: Introducing pBTC through a cross-chain bridge architecture with a validator network, combined with LayerZero to address the issue of BTC liquidity fragmentation after cross-chain transactions.
• Grand Application Scenarios:
• Native BTC DeFi: Providing a safer and more user-friendly channel for institutions and retail investors to earn yields by putting their Bitcoin into DeFi protocols.
• Real-World Payments: Targeting the trillion-dollar markets of cross-border remittances and on-chain salary payments with zero-fee USDT.
• Challenging Traditional Finance: Launching Plasma One Neobank, offering high-interest savings and substantial cashback on spending, directly competing with payment giants like PayPal and Visa.
• Prospects and Challenges:
• Advantages: Possessing top-tier resources and background, with a clear and grand narrative, based on the two core assets of the crypto industry (USDT and BTC).
• Challenges: Facing fierce competition from existing ecosystems like Ethereum and Tron, user migration will require time and costs, and its financial products also face significant regulatory uncertainties.

TGE Hype Review

The subscription activity conducted by Plasma mid-year serves as an important window to observe its initial market appeal. The "first deposit, then apply" admission mechanism objectively filtered a user group with certain financial strength and high willingness to participate. The activity recorded approximately $1 billion in inflows within 30 minutes, proving that the market had formed a high value expectation and strong consensus for participation before the project's mainnet launch.

Subsequently, Plasma's collaboration with Binance's wealth management platform Binance Earn marked another key market expansion. By launching a customized "Plasma USDT Locking Product," Plasma not only gained endorsement from a top centralized exchange but also directly reached its vast user base.

The initial quota of 250 million USDT was quickly subscribed within an hour, with subsequent batches increasing to a cap of 1 billion USDT. This series of data validated the successful transmission of market demand from high-net-worth early users to a broader retail market. The product's dual yield structure—daily settled USDT earnings and XPL token rewards post-TGE—effectively balanced users' short-term yield expectations with long-term holding incentives.

Last week's TGE event itself showcased Plasma's phenomenal performance. From the perspective of the airdrop distribution strategy, the project set an attractive inclusive threshold: each participant was guaranteed to receive at least 9,300 XPL tokens. If estimated at the recent high price of $1.69, this means the minimum airdrop asset value reached $15,700. This high-value, wide-coverage airdrop model established a solid value foundation and positive market sentiment for the XPL token.

When analyzing the capital flow before and after the TGE, we observed two distinctly different phases. Before the TGE, the stablecoin deposits within the network were mainly composed of cross-chain wrapped assets like AETHUSDC (approximately 60%) and AETHUSDT (approximately 39%). After the TGE ended, data from this week showed that the total stablecoin deposits shrank by nearly $950 million. This large-scale capital outflow should be viewed as a normal, predictable market behavior, primarily attributed to early short-term funds aimed at arbitrage realizing profits after achieving their goals.

However, what is more noteworthy is the subsequent strategic adjustments and capital structure optimization. The exit of short-term speculative capital has created space for the entry of long-term strategic capital.

As the main entry point for Tether to control on-chain USDT settlements, Plasma's collaboration with institutional liquidity service providers like Bitfinex, Flow Traders, and DRW aims to build a stable, efficient, deep, and resilient financial infrastructure for the network.

Currently, Plasma is working with Tether to introduce native USDT and collaborating with liquidity partners like Bitfinex, Flow Traders, and DRW. The USDT on Plasma increased from 4 million to 37 million within a week.

Plasma's Mission: Addressing Core Pain Points Between Web 2 and Web 3

Plasma possesses a strong strategic resource background and precise market positioning. The lineup of investors in Plasma is top-tier, including Bitfinex (the parent company of Tether), which has the strongest synergy with its ecosystem, as well as Peter Thiel's Founders Fund from mainstream tech investment and top venture capital Framework from the crypto-native field. This unique investment portfolio provides Plasma with strong support in terms of capital, strategic alliances, and technological credibility, forming an important competitive barrier for its early development.

Leveraging these resources, the project team launched its flagship application layer product—Plasma One—in September this year. This product is positioned as a "native digital bank" for stablecoins, with the core aim of building a seamless bridge connecting traditional finance and the crypto world. By partnering with Signify Holdings to issue physical debit cards licensed by Visa, Plasma One expands the use cases of USDT from on-chain to tens of millions of offline and online payment terminals globally. Additionally, it addresses the core pain points in existing crypto payment solutions by offering zero-fee USDT transfers, an innovative "earn while you spend" account system, and up to 4% cashback on spending, providing user incentives that can compete with leading fintech companies.

When assessing Plasma's long-term potential, we must recognize that its significant initial success is not coincidental but stems from its profound insights into and precise responses to the dual pain points of the market. We can deconstruct its core narrative from two dimensions: Web 2 (external market pull) and Web 3 (endogenous strategic drive).

1. Web 2 Perspective: Filling the Payment Infrastructure Vacuum Post-Legalization

From the external market environment, a decisive macro catalyst is the passage of the U.S. "Genius Act" in July 2025. This act historically recognizes stablecoins as legitimate payment tools alongside debit card networks and ACH systems. However, this top-level regulatory approval highlights the severe lag in underlying infrastructure. USDT currently mainly operates on general-purpose public chains like Ethereum and Tron. These networks are not designed for high-frequency payment scenarios and have three core deficiencies:

• Transaction Cost Friction: Users must hold and pay gas fees denominated in volatile assets like ETH or TRX for USDT transfers, increasing the usage threshold and cost uncertainty for non-crypto-native users.
• Performance Bottlenecks: The architecture of general-purpose chains cannot meet the scalability required for future large-scale payments.
• Insufficient Compliance: There is a lack of compliance and identity verification frameworks designed for institutional users embedded at the protocol layer.

In this context, Plasma's strategic positioning is clear: to become a dedicated settlement layer built specifically for USDT, with Bitcoin network consensus as its security foundation, aimed at addressing all the aforementioned infrastructure bottlenecks.

2. Web 3 Perspective: Evolution of Tether's Business Model and Value Return

From an internal strategic perspective, Plasma is a key piece in Tether's fundamental leap in its business model. For a long time, Tether, as the issuer of USDT, has enjoyed a massive asset reserve of hundreds of billions and profited from it, but the enormous network effects and transaction value it creates have mostly been captured in the form of transaction fees by underlying public chains like Ethereum and Tron. This portion of "market dividends" that Tether has "given away" represents a significant gap in its business model.

Therefore, the core motivation for Tether to promote Plasma lies in achieving vertical integration of the value chain, reclaiming the economic benefits that have been lost for years. This is not just about reclaiming fee income; it is a complete strategic transformation: evolving from a passive "stablecoin liability issuer" to an active "global payment infrastructure operator" that controls network rules and business models. Through Plasma, Tether aims to build a closed-loop ecosystem that encompasses the issuance, circulation, settlement, and application scenarios of USDT, thereby solidifying its long-term dominance over its business empire.

How Much Has Tether "Lost"?

To understand the strategic necessity of Plasma, we must first examine the significant "value capture asymmetry" present in Tether's current business model. The network scale of USDT has reached unprecedented heights, with a circulating market value of $170 billion, and the annual transaction settlement volume reportedly surpassing the combined total of PayPal and Visa. However, there is a fundamental disconnect between the operation of this massive on-chain economy and Tether's core revenue model.

Tether's current annual profit of approximately $13 billion primarily comes from managing its reserve assets (mainly U.S. Treasury bonds) to earn a 3-4% annualized return. Although the absolute profit value is considerable, this income model appears extremely passive and indirect compared to the enormous economic activity generated daily by the network supported by USDT. Essentially, Tether has created the most liquid core asset in the crypto world but has failed to directly benefit from the "circulation" aspect of that asset, which is the fundamental pain point of its business model.

This imbalance in value capture is specifically reflected in the enormous externality benefits that USDT generates for its host public chains.

Tether's "Loss" on Ethereum

In the Ethereum ecosystem, USDT is a foundational source of liquidity for DeFi. Transfers and smart contract interactions related to USDT contribute nearly $100,000 in Gas fees to the Ethereum network daily, consistently accounting for over 6% of the total Ethereum transaction fees.

This substantial and ongoing revenue is captured by Ethereum's validator nodes, becoming part of the economic incentives for maintaining network security. However, as the source of value creation, Tether does not receive any of these earnings.

Tether's "Loss" on the Tron Network

The phenomenon of value spillover is even more pronounced on the Tron network. By optimizing transfer costs and speeds, Tron has successfully positioned itself as the primary retail payment and transfer network for USDT. Activities related to USDT account for over 98% of the total transfer volume and Gas consumption on the Tron network.

It can almost be said that the trading activity and economic model of the Tron network are entirely built on providing "settlement outsourcing services" for USDT. Through this highly intertwined relationship, Tron has earned nearly $2 billion in annual revenue in 2024 alone. This enormous profit is entirely derived from the massive demand for USDT, yet it similarly cannot be directly transferred to Tether's balance sheet.

Strategic Conclusion: Plasma as an Inevitable Choice for Value Return

In summary, the direct motivation for Tether to launch Plasma is to correct this long-standing imbalance in value distribution. Third-party public chains like Ethereum and Tron effectively limit Tether's complete control and revenue rights over the vast stablecoin economy it has created.

Therefore, the establishment of Plasma is at the core of Tether's strategy to achieve "vertical integration of the value chain." Its fundamental objectives are:

1. Reclaim Revenue Rights: To reintegrate the USDT transaction fees, payment service fees, and related DeFi ecosystem earnings currently captured by networks like Ethereum and Tron back into its own system.
2. Establish Economic Sovereignty: To break free from dependence on third-party public chains and build a self-controlled financial infrastructure with USDT as the native asset.
3. Achieve Business Model Upgrade: To expand from a single reserve management profit model to a platform-based business model that captures value from multiple dimensions, including trading, payments, and application development.

As the Plasma infrastructure matures, Tether aims to reclaim the substantial market dividends it has "given away" to external public chains over the past years. This is not only a tactical measure to address immediate pain points but also a long-term strategic layout to ensure its core competitiveness in the future digital economy.

Plasma's Two Fundamentals and Two Innovations

After clarifying Plasma's strategic intent, we analyze its fundamentals. The overall architecture of Plasma is built around two core pillars: 1) Asset support with USDT as the absolute priority, and 2) Native integration of BTC.

Therefore, any effective evaluation of Plasma's technical fundamentals must revolve around the following two key questions:

• Regarding USDT: What mechanisms does Plasma provide that offer superior utility compared to other networks? Does its technical implementation constitute a sustainable competitive barrier that is difficult to replicate?
• Regarding BTC: What trade-offs does its "native support" solution make in terms of decentralization and security? Are the trust assumptions it introduces standard industry practices, or do they introduce new, untested risk models?

1. Core Network Architecture: The Foundation of Performance and Compatibility

Before delving into the application layer, let's first look at its underlying network. Plasma employs two key optimizations in its architecture:

• Consensus Layer - PlasmaBFT: This is an original BFT consensus algorithm designed to significantly shorten transaction finality times. For a network positioned for payments and settlements, high-speed finality is the foundation for ensuring user experience and commercial application feasibility.
• Execution Layer - Reth Client: Plasma uses the high-performance Ethereum client Reth, written in Rust. The core aim of this move is to maximize the network's transaction processing capacity and execution efficiency while ensuring complete compatibility with the EVM.

These two underlying optimizations do not exist in isolation; together, they form a high-performance foundation that serves USDT's high-frequency use cases and maintains the cross-chain security of native BTC.

2. USDT Priority Strategy: Modular Applications, Not Technical Barriers

In enhancing the utility of USDT, Plasma's implementation path adopts the "account abstraction" standard widely discussed and accepted by the Ethereum community, specifically the EIP-4337 and EIP-7702 proposals. By integrating the Paymaster function from the account abstraction framework, Plasma can achieve key functionalities such as "zero-fee transfers of USDT" and "allowing users to pay Gas with various tokens including USDT."

From this analysis, we conclude that while these features greatly optimize user experience, the underlying technology is not unique to Plasma. This is a typical modular design approach—prioritizing the adoption of the most advanced and widely accepted mature protocols in the industry rather than developing a closed system independently. Therefore, from a technical fundamental perspective, Plasma's advantages in stablecoin functionality do not stem from an insurmountable technological moat but from the rapid and effective integration of existing advanced technologies.

3. Native BTC Support: Recombination and Optimization of Mature Solutions

For native support of BTC, any public chain's implementation path must involve some form of cross-chain bridge. Plasma emphasizes that its cross-chain bridge solution avoids the drawbacks of a single centralized custodian and small high-risk multi-signature wallets:

• Security Model: Security is provided by a decentralized network of validators, each independently running a full Bitcoin node.
• Asset Control: The fund pool is not controlled by any single party; deposits and withdrawals of BTC must be collectively approved by a threshold signature from a legally defined number of validators.

The key distinction between Plasma's solution and other general-purpose cross-chain bridges that use a validator network as an intermediary lies in its "specialization." Validators in general-purpose cross-chain networks need to monitor multiple blockchains, while Plasma's validator network only needs to focus on monitoring interactions between the Bitcoin mainnet and Plasma's designated vault address, theoretically reducing the system's complexity and attack surface.

Similar to the strategy for USDT, Plasma's native cross-chain bridge is also a recombination of existing mature technologies. It achieves industry-leading practices in security without introducing disruptive innovations.

4. Liquidity Solution: Integration of LayerZero OFT Standard

The pBTC generated after successful cross-chain transactions will face the common dilemma of all wrapped BTC assets (such as WBTC)—liquidity fragmentation. To address this issue, Plasma integrates LayerZero's Omnichain Fungible Token (OFT) standard. This standard allows pBTC to be treated as the same asset across all supported EVM chains, thereby aggregating into a unified, non-fragmented liquidity pool.

Conclusion: A "Steady Wins the Race" Technical Philosophy

Overall, Plasma's technical development approach presents a clear two-layer structure:

1. Underlying Infrastructure: Performance optimizations at the consensus and execution layers to ensure the network is efficient and stable.
2. Application and Product Layer: A comprehensive modular approach that integrates the best existing solutions in the industry, such as the Paymaster for account abstraction, Axelar's validator network model, and LayerZero's OFT standard.

Ultimately, we conclude that the most significant characteristic of Plasma's technical fundamentals is low risk and theoretical security; it does not introduce additional and dangerous trust assumptions. However, its moat does not lie in the technology itself. The core philosophy of its technical development is "steady wins the race, without dragging behind"—ensuring the absolute robustness of the technical architecture, making it a solid platform that does not fail, thereby allowing its true moat—an ecosystem led by Tether, vast native liquidity, and top-tier strategic partnerships—to fully发挥作用.

Market Entry Strategy for pBTC and USDT

After thoroughly assessing Plasma's technical architecture, we need to further examine how its core assets will translate into actual market utility. Plasma's market entry strategy is highly focused on its two pillar assets: pBTC and USDT, targeting the yield market for Bitcoin and the high-frequency payment market for stablecoins, respectively.

1. Native BTC (pBTC): Targeting the "Yieldization" Wave of Bitcoin Assets

The core value proposition of pBTC is to provide Bitcoin holders with a secure and efficient channel to participate in a broader DeFi ecosystem, thereby unlocking the yield potential of this vast existing asset.

Validation of the Stock Market and Retail User Opportunities:

The market demand for wrapped Bitcoin (Bridged/Wrapped BTC) has been fully validated. Current data shows that over 242,600 BTC have been migrated to various smart contract platforms, with as much as 86.5% (approximately 209,800 BTC) actively deployed in various DeFi protocols to earn yields. This indicates a strong willingness among Bitcoin holders to seek yields. The foundational market opportunity for pBTC arises from retail users who have previously questioned the security of various wrapping solutions and need a more reliable way to:

• Use BTC as collateral or liquidity assets in DeFi protocols.
• Securely store BTC on EVM-compatible chains with a more user-friendly experience and lower transaction costs.

Core Growth Engine: Asset Management for Institutional and Corporate Treasuries

The more imaginative growth point for pBTC lies in capturing the accelerating trend of institutional and corporate Bitcoin adoption. To date, the total amount of Bitcoin held by publicly listed companies and private enterprises has reached approximately 1.38 million BTC, an increase of 833,000 BTC since early 2025, highlighting the strong momentum of institutional adoption.

We predict that the asset strategies of these corporate holders will gradually evolve from the initial "passive holding" to a more mature "active treasury management."

In this evolution, how to safely and compliantly generate additional yields from existing Bitcoin will become their core demand. In this context, pBTC is positioned as the ideal institutional solution. Given that institutional users place security as the undisputed top priority when choosing infrastructure, the robust security model based on a decentralized validator network and threshold signatures analyzed by Plasma will constitute its core competitive advantage in attracting this clientele.

2. Zero-Fee USDT: Seizing the High-Frequency Payment Vertical Market

Plasma's implementation of "zero-fee USDT transfers" through account abstraction technology precisely targets two cost-sensitive and large-scale payment verticals.

Cross-Border Payments and Remittances:

Plasma aims to disrupt the traditional cross-border remittance industry by leveraging the inherent low-cost and high-efficiency advantages of blockchain technology. The potential scale of this market is enormous:

• Market Size: According to statistics, in 2023, there are 200 million expatriates globally, creating a stable demand for remittances. In 2024, the total remittance flow to low- and middle-income countries is expected to reach $700 billion.
• Industry Pain Points: Traditional models involve intermediaries (banks, foreign exchange institutions) that capture excessive value. For example, in the US-India remittance corridor, an average transaction cost of 4% means over $600 million in value is lost annually from senders to recipients. On-chain stablecoin payment solutions theoretically can return this value to users.

On-Chain Payroll:

This is another enterprise-level application scenario with significant potential. Taking the US market as an example, in 2023, its total payroll reached $11 trillion, with accompanying payment processing fees amounting to $1.4 billion. For companies with global, remote teams, using stablecoins for payroll can significantly simplify processes and reduce costs.

It is important to note that the above application scenarios are not entirely new concepts; many projects attempted them in the previous market cycle. The most essential difference between the current environment and the past is the clear shift in macro regulatory policies, which opens a window for compliant applications.

However, we must recognize that there remains a significant "implementation gap" between high-level policy release and the willingness of medium-sized enterprises to adopt it practically, supported by clear regulatory execution guidelines. This requires project teams to engage in long-term and in-depth planning in compliance, legal, and enterprise solution aspects beyond just technology.

Strategic Value, Growth Flywheel, and Future Outlook of Plasma

Strategic Empowerment of USDT by Plasma

From the current perspective (September 2025), the core value that Plasma brings to USDT is multidimensional. Firstly, in terms of geopolitical competition, it will serve as a key weapon to consolidate USDT's market leadership and respond to competitors like USDC. Plasma is positioned as the commercial and retail access layer (Tether-to-C Terminal) for the Tether ecosystem, with its core strategy being to achieve this through a dual-driven "killer app":

1. Disruption of Traditional Finance (TradFi): Through the Plasma One product matrix, it directly challenges the market positions of traditional payment giants like PayPal and Visa.
2. Aggregation in Crypto Finance (DeFi): Utilizing its technical compatibility, it plans to integrate over 100 mainstream DeFi protocols, siphoning the native yields of the crypto world into its ecosystem.

Core Engine of the Growth Flywheel: Plasma One Products and Yield Aggregation

Plasma One digital banking is the tangible product that realizes the above strategy. Its offerings of 10% passive savings annual yield and 4% cashback debit card represent an extremely aggressive market penetration strategy. In an ideal regulatory environment, this level of user incentive is sufficient to significantly impact the traditional payment and savings markets, efficiently acquiring users and market share from the existing system.

The sustainability of these high yields comes from a sophisticated yield aggregation model. With its complete EVM compatibility, Plasma can seamlessly integrate the infrastructure of the entire crypto world. Its clear goal is to incorporate protocols with strong and sustainable yield generation capabilities, such as Aave and Ethena Labs, into its "yield landscape." In this way, Plasma abstracts the complex operations of the DeFi world, serving as a yield aggregation layer that channels the yields generated by external protocols (far exceeding the 4% treasury yield generated by Tether's own reserve assets) back to Plasma One to subsidize its high incentives for consumers.

To optimize user experience to the utmost, Plasma has also established a transaction fee subsidy channel through the Paymaster mechanism. This design shifts the network costs that users would incur when interacting with DeFi protocols onto the protocol parties, achieving a completely free interaction experience for end users, which is a decisive advantage in attracting and retaining large-scale retail users who are highly sensitive to costs.

Grand Narrative and Tether's Endgame

From a macro narrative perspective, Plasma's positioning is based on the two most core and enduring themes in the crypto industry: Bitcoin and Stablecoins. By designating USDT as the native Gas token, building a seamless cross-chain liquidity pool for pBTC, and considering privacy and compliance in its design, Plasma constructs a strong persuasive case at a strategic level.

Behind this is Tether's ultimate strategic vision:

• To elevate USDT from a "guest asset" circulating across multiple chains to a "native settlement currency" on its own sovereign network.
• To transform the company's BTC reserves from a passive balance sheet item into "productive assets" that can be actively managed within its own ecosystem.
• Ultimately, to consolidate the current supply of USDT, totaling $150 billion, scattered across a dozen different networks, into a unified settlement layer controlled by Tether.

Once this goal is achieved, all transfers, exchanges, issuances, and redemptions of USDT will occur in Tether's "home ground." At that point, Tether will not only gain unprecedented network pricing power and influence but will also naturally control the core revenue gateways of this new financial infrastructure.

Risk Assessment and Conclusion

Despite the grand business concept, there are still significant challenges between strategy and implementation:

1. Competitive Risk: Native crypto ecosystems like Ethereum and Tron will not sit idly by as their market shares are eroded; the costs and inertia of user migration present substantial resistance. Additionally, traditional financial giants like PayPal and Visa will undoubtedly take countermeasures.
2. Regulatory Risk: This is the most critical uncertainty factor. The 10% savings yield offered by Plasma One is likely to be scrutinized by regulatory authorities in major jurisdictions; if classified as unregistered securities or banking products, its core growth engine will face the risk of stagnation.

It can be determined that the fundamentals of Plasma as an infrastructure are top-notch. Building on the momentum of a successful TGE, its next phase of growth will entirely depend on its execution capabilities in enterprise adoption, institutional BTC treasury deployment, and large-scale ordinary user acquisition across these three dimensions.

The development ceiling of Plasma is fundamentally tied to the future prospects of both the Bitcoin and stablecoin sectors. By positioning itself as a hub for these two core assets and the optimal settlement infrastructure, Plasma's long-term value ceiling, in a sense, is the future of the entire crypto finance landscape.

About Movemaker

Movemaker is the first official community organization authorized by the Aptos Foundation, jointly initiated by Ankaa and BlockBooster, focusing on promoting the construction and development of the Aptos ecosystem in the Chinese-speaking region. As the official representative of Aptos in the Chinese-speaking area, Movemaker is committed to building a diverse, open, and prosperous Aptos ecosystem by connecting developers, users, capital, and numerous ecological partners.

Disclaimer:

This article/blog is for reference only, representing the author's personal views and does not reflect the position of Movemaker. This article does not intend to provide: (i) investment advice or recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets, including stablecoins and NFTs, carries high risks, with significant price volatility, and they may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. If you have specific questions, please consult your legal, tax, or investment advisor. The information provided in this article (including market data and statistics, if any) is for general reference only. Reasonable care has been taken in compiling this data and charts, but no responsibility is accepted for any factual errors or omissions expressed therein.

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