Plasma: A High-Performance Blockchain Designed for Stablecoins

Stablecoins are gradually becoming the core carrier of on-chain payments, asset settlement, and financial services. However, the existing Blockchain infrastructure has not been optimized for their characteristics, leading to common issues such as high transaction costs, performance bottlenecks, and centralized risks.

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

This concept quickly attracted market attention. 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 also chosen Plasma's initial coin offering as its first product.

The Necessity of Stablecoin-Specific Blockchain

According to an industry report, the annual trading volume of stablecoins is predicted to reach $15.6 trillion in 2024, exceeding the transaction volume of mainstream credit card companies. As a key application in the crypto space, stablecoins play an important role in various scenarios, attracting numerous projects and enterprises to accelerate their layout.

The Plasma team believes that the mainstream public chains relied upon by current stablecoins have obvious flaws: Ethereum's high gas fees make it unsuitable for payment scenarios; while some low-fee public chains, although fast, are overly centralized.

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

Technical Features and Innovations

Plasma chose to build a Bitcoin sidechain primarily because of the unparalleled security and decentralization characteristics of the Bitcoin network, providing an ideal foundation for global stablecoin settlements.

In terms of core consensus mechanisms, the Plasma team has independently developed PlasmaBFT, which is evolved from Fast HotStuff and supports processing thousands of transactions per second. PlasmaBFT is written in Rust and is optimized for low end-to-end latency.

In addition, 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.

The deployment of the Plasma consensus mechanism will occur in three phases: from the initial trusted validators, to testing with an expanded set of validators, and finally transitioning 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-based architecture, designed with two parallel processing layers: one layer is responsible for regular fee transactions, which are faster; the other layer specifically handles free transactions, which are slightly slower. Users can choose to wait in line for free transactions or pay directly for the fast lane.

XPL Token Issuance and Lock-up Rules

XPL is the native token of the Plasma network, used to maintain consensus and security and serves as fuel for the execution layer. XPL plays a core role in the system, ensuring the security of the PlasmaBFT consensus mechanism, supporting EVM execution based on Reth, and also supporting 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-staking will open on June 9, and the actual sale will begin a few weeks later. This round of public fundraising plans to sell 10% of the total XPL supply, corresponding to a fully diluted valuation of $500 million.

Participants need to deposit stablecoins into the Plasma Vault on Ethereum, and the vault contract will deploy the funds to lending platforms to generate returns. During the deposit period, participants accumulate "units" based on the duration of the deposit, and the number of units determines the guaranteed allocation of XPL. After the deposit period ends, the Vault enters a lock-up period of at least 40 days.

When the Plasma mainnet Beta goes live, participants will receive the corresponding allocation of XPL tokens, and the funds during the deposit period will be bridged to the Plasma network and can be withdrawn. The distribution of XPL for American participants will be delayed until the end of the lock-up period, and the purchased XPL tokens will be locked for 12 months.

Plasma emphasizes that this issuance structure reflects the core values of its network: encouraging long-term participation, maintaining aligned interests, and enhancing transparency, ensuring that early contributors can fairly share in the benefits brought by the network's growth.