[Long English Thread] In-Depth Analysis: How Can Plasma Change the Landscape of On-Chain Payments?

Chainfeeds Guide:

The newly listed XPL today is a brand new USDT chain. Can it compete with Justin Sun’s Tron?

Source:

Author:

Sumcap

Opinion:

Sumcap: On January 3, 2009, Bitcoin’s genesis block was born, with that famous embedded message: “The Chancellor on brink of second bailout for banks.” This statement directly referred to UK Chancellor Alistair Darling’s plan to use taxpayers’ money once again to rescue failing banks after the 2008 financial crisis. The collapse of Lehman Brothers had already frozen the global financial system, mortgage-backed securities had lost all value, and the traditional financial system’s lack of oversight, institutional greed, and the reality that ordinary people ultimately foot the bill were fully exposed. Against this backdrop, Bitcoin was seen as a byproduct of the crisis, emerging as a sound money: fixed supply, no centralized authority, peer-to-peer transmission, and immune to bailouts. But the cost of sound money was high volatility in USD terms. As more people entered the market, the need for predictability in payments and settlements rose rapidly. Compared to (a) bank wire transfers, (b) settlements that took days to complete, and (c) high fees, Bitcoin payments had no inherent advantage in speed or cost, which further spurred the exploration of stablecoins. In July 2014, BitShares launched $BitUSD, allowing users to collateralize $BTS to mint USD-pegged tokens. However, due to over-reliance on $BTS, price drops would quickly trigger liquidations, making stability difficult. A few months later, Tether ($USDT) launched, backed by fiat custody, 1:1 redemption, requiring neither over-collateralization nor complex mechanisms. Within just one year, its trading volume reached $19.3 million, with a market cap of $1.45 million. Compared to ETH at $1 and BTC at $240 at the time, USDT’s success demonstrated the efficiency and intuitiveness of its model. Subsequently, MakerDAO launched the decentralized stablecoin DAI, and Circle launched the compliant USDC. Stablecoins gradually became the most important payment and trading medium in the crypto world. By 2024, stablecoins had become the most widely used product in crypto, with a market cap of $271.6 billion, even surpassing the total value locked in all of DeFi ($166.1 billion). That year, Visa processed a total payment volume of $13.2 trillion, while the raw on-chain settlement volume of stablecoins exceeded $22 trillion. After excluding internal exchange transfers and MEV, there was still $5.67 trillion in real transaction volume. The daily adjusted trading volume grew by 120% in one year, from $432.3 billion to $949.1 billion, showing sustained demand for stablecoins. More importantly, in July 2025, the US “Genius Act” officially recognized stablecoins as legal payment instruments, including them in mainstream clearing systems such as debit card networks, ACH, and wire transfers. However, the infrastructure has not kept pace. Take USDT, which has over 60% market share, as an example: it still relies on general-purpose chains like Ethereum, which were not designed for payments—transfers require volatile gas fees, and the compliance and scale support needed by institutions are still lacking. This creates a paradox: stablecoins are now comparable to Visa in scale, yet remain second-class citizens, just ordinary tokens on most public chains. A similar dilemma exists for Bitcoin. Although it is already the world’s seventh-largest asset, with a market cap surpassing silver, its utilization in DeFi is extremely low. Current BTC wrappers (such as WBTC) are distributed across different chains, resulting in fragmented liquidity and severely limiting its financialization potential. To solve these problems, the Plasma Foundation proposed a stablecoin-first, BTC-native on-chain design. Instead of treating USDT or BTC as add-ons, it makes them first-class citizens of the system. Its technical core includes: PlasmaBFT consensus mechanism (improved from Fast-HotStuff, supporting pipelined parallelism to improve block production efficiency); Reth execution layer (EVM-compatible, built in Rust, high-performance transaction and state transition processing); and a native BTC bridge (driven by a decentralized validator network, abandoning centralized custody and small-scale multisig). This bridging method not only enhances trust minimization, but also unifies $pBTC liquidity through LayerZero’s cross-chain token standard (OFT), avoiding the fragmentation issues of WBTC. In terms of payment experience, Plasma’s stablecoin mechanism is also innovative: it supports zero-fee USDT transfers, with contract-level Paymaster sponsoring gas fees; allows direct use of USD as native gas; and introduces auditable privacy payments, balancing compliance and confidentiality. This architecture makes Plasma a natural BTC-USDT settlement layer. [Original text in English]