High-Performance Blockchain Designed for Stablecoins: Innovations and Challenges of Plasma

Stablecoins have become the core medium for on-chain payments, asset settlement, and financial services, but the existing blockchain infrastructure has not been optimized for their characteristics, and issues such as high transaction costs, performance bottlenecks, and centralization risks are still prevalent.

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

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

The Necessity of a Stablecoin-Specific Blockchain

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

As a key application in the crypto space, stablecoins play a central role in multiple scenarios such as payments, cross-border settlements, DeFi, and on-chain transactions, attracting numerous new projects and traditional enterprises to accelerate their layouts and build new product ecosystems around it. Plasma focuses on stablecoin infrastructure, aiming to create a high-throughput and scalable dedicated Blockchain, and is expected to become the global settlement and issuance layer for digital dollars.

The Plasma team believes that mainstream public chains currently have shortcomings in supporting stablecoins: Ethereum is not suitable for payment scenarios due to high Gas fees; some public chains have gained market share due to low fees and fast transactions, but their number of nodes is limited and their concentration is high, posing a risk of centralization.

To address the challenges of high fees and centralization, 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 fundamental needs of decentralized financial activities while leveraging the security of Bitcoin and providing zero-fee USDT transactions, thereby unlocking the potential of the trillion-dollar stablecoin market.

Technological Innovation: Inheriting the Zero-Fee Transfer Mechanism of Bitcoin's Network Security

The Plasma team chose Bitcoin as the underlying network, believing that its unparalleled security and decentralization characteristics provide an ideal foundation for global stablecoin settlement. The robust, trustless network of Bitcoin offers immutable security guarantees, laying a solid foundation for the Plasma system.

In terms of the core consensus mechanism, the Plasma team independently developed PlasmaBFT, which is evolved from Fast HotStuff and supports processing thousands of transactions per second, meeting the global stablecoin payment's demand 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 achieve a security level comparable to Bitcoin without relying on a single validating node or intermediary, reducing single points of failure or attack risks, and providing a solid trust foundation for the large-scale settlement of stablecoins.

The deployment of the Plasma consensus mechanism will be carried out in three phases: the initial phase will be validated by selected trusted entities; the second phase will expand the validator set to test scalability and performance; the final phase will transition to a permissionless model, achieving full decentralization.

To address the pain point of high transaction fees, Plasma has introduced a "zero-fee" transfer mechanism for mainstream stablecoins, which will enhance the universality and convenience of stablecoin payments, particularly suitable for a large number of daily micropayment scenarios. The Plasma network adopts a block-based architecture, designed with two parallel processing layers, one layer responsible for normal fee transactions, and the other layer specifically for handling free transactions. To ensure smooth operation, Plasma has also incorporated an ordering mechanism, including rate limits, minimum balance requirements, and replacement strategies, to maintain overall efficiency and the normal operation of the network.

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. The XPL token plays a core role in the system, not only ensuring the security of the PlasmaBFT consensus mechanism and supporting EVM execution based on Reth, but also underpinning the trust-minimized Bitcoin bridge.

The public sale of XPL will be conducted on the Plasma official website. Participants must complete compliance processes such as identity verification and jurisdiction screening. The pre-storage 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 various stablecoins can be used to purchase XPL. If some participants do not subscribe to their shares, the remaining XPL will be proportionally opened for purchase by users willing to invest more. This round of public offering plans to sell 10% of the total XPL, corresponding to a fully diluted valuation of 500 million dollars.

During the deposit phase, participants deposit stablecoins into the Plasma Vault on Ethereum, and the vault contract deploys the funds to certain DeFi protocols to generate returns. Participants accumulate "units" based on the duration of the deposit, and the number of units reflects their share of the deposit, ultimately determining the guaranteed allocation of XPL.

After the deposit period ends, the Vault enters a locked state for at least 40 days. When the Plasma mainnet Beta goes live, participants will receive the corresponding allocation of XPL coins, and the USDT funds from the deposit period will also be bridged to the Plasma network and can be withdrawn.

This public offering is only open to eligible regions. Users in certain areas may need to verify specific qualifications, and the purchased XPL coin may be locked for a certain period. Plasma emphasizes that this issuance structure reflects the core values of its network: encouraging long-term participation, maintaining alignment of interests, and strengthening transparency, ensuring that early contributors can fairly share in the benefits brought by the growth of the network.