Author: Sam, Messari Analyst Compiler: Tim, PANews Plasma is not just a stablecoin chain; it is also a Bitcoin sidechain and privacy solution. Tether is likely to launch a native USDT on the Plasma chain, enabling low-slippage exchanges of Bitcoin and minimizing trust in Bitcoin-collateralized stablecoin lending, which will be key to unlocking new demand in BTCFi. Similar to the Circle payment network, Plasma serves as a payment network with banking partners and custodians, supporting the fiat outflow channel for USDT. ​​Plasma is often oversimplified as a "stablecoin chain." This understanding is not incorrect, but it misses the point. What Plasma is really building is a financial infrastructure layer specifically designed for Bitcoin, which not only supports stablecoins but considers them as an underlying foundation. It is a Bitcoin sidechain that provides native USDT support, protocol-level privacy protection, and its Gas model does not require users to hold volatile governance tokens. This is not just about payment functionality; it aims to build a native settlement layer for Bitcoin, priced in USD.​​ The project is supported by Peter Thiel along with Paolo Ardoino's Tether and Bitfinex, integrating three major emerging technology trends: Bitcoin Rollup technology, stablecoin infrastructure, and on-chain privacy protection. Each concept has investment value on its own, but the combination of all three is more likely to build the most valuable financial infrastructure layer in the Bitcoin ecosystem. Plasma is a Bitcoin sidechain that is not limited to stablecoin applications. The architecture of Plasma uses Bitcoin as its ultimate settlement layer. The chain functions as both a L2 and a sidechain, regularly anchoring state commitments to the Bitcoin blockchain, alleviating trust dependency assumptions, and inheriting Bitcoin's security model. Plasma chain technology is highly likely to lead a new wave in BTCFi, as it unlocks the functionalities users truly desire: exchanging large amounts of Bitcoin with very low slippage and directly staking native Bitcoin to borrow stablecoins. This seemingly basic demand actually requires two core supports: deep liquidity (supported by Tether) and a trust-minimized mechanism (supported by BitVM2). With Tether's direct endorsement, Plasma can tap into one of the deepest liquidity asset pools in the crypto world. The platform is highly likely to natively support USDT, giving it an advantage over Bitcoin sidechains that rely on cross-chain stablecoins or new native stablecoins. It will essentially become the core settlement layer for BTC/USDT trading, which is a functionality that the current Bitcoin mainnet itself lacks. Unlike other Layer 2 and sidechains that require encapsulating Bitcoin or custodial bridges, Plasma has built a dedicated Bitcoin cross-chain bridge that operates through a permissionless validator mechanism and promises to adopt this solution after BitVM2 goes live. This will achieve a more seamless user access while effectively reducing counterparty risk. Built-in Privacy Features Privacy protection is directly integrated into Plasma's transaction model. Users can opt to join a shielding transfer feature that hides transaction parties and amount information without sacrificing interoperability and user experience. Unlike ZK privacy solutions (such as ZCash, Aztec) that require specialized tools or browser extensions, Plasma's privacy model can achieve application layer compatibility by introducing basic account abstraction elements, making its user experience closer to banking services rather than just another EVM chain. This design supports selective disclosure, enabling users to prove specific transaction details when needed (for example, to exchanges, auditors, or compliance platforms) without exposing all on-chain activities. This privacy system ensures individual control while achieving interoperability with regulatory frameworks. Crucially, Plasma technology allows users to trade without holding or using volatile native tokens. Gas fees can be paid directly in USDT or BTC, and these payments will be automatically converted through an oracle mechanism or internal pricing system. This design not only simplifies the user experience but also eliminates the transaction traceability risks associated with purchasing and consuming native tokens, making Plasma an ideal choice for users seeking low-friction, discreet financial operations while achieving privacy protection without compromising excellent usability. Stablecoin Perspective The core point to understand is that Plasma represents the most direct investment in Tether. In the traditional sense, Tether is merely a liquidity layer across platforms, while Plasma is positioned as a vertically integrated execution environment where USDT is no longer just one of many assets but exists as a native component of the chain. This brings two potential value-add spaces. The first is market-driven; as demand for stablecoins grows (especially from global users seeking USD exposure), USDT-based products may receive strong foundational pull. Additionally, Circle's IPO refocuses the market on stablecoins, and assets linked to Tether's infrastructure are expected to benefit from the rising market enthusiasm. The second point is structural advantage. Plasma can connect financial institutions with compliant global payment systems. This is similar to the Circle payment network but serves the Tether ecosystem. The system will possess complete anti-money laundering capabilities to support enterprise onboarding, enabling fiat exchange channels through integration with banking partners and custodians while still supporting permissionless DeFi applications. With near-real-time and low-cost international settlement capabilities, Plasma can compete with traditional banking networks. Considering that the circulation of USDT is nearly 2.5 times that of USDC, and depending on the valuation of Circle's payment network, I believe that the institutional demand generated solely from payment network functionality could support a fully diluted valuation (FDV) of $500 million. The financial layer built on Bitcoin, Plasma, with startup liquidity provided by Tether and enhanced by native privacy features, can achieve goals that other cryptocurrency projects find difficult to reach.

#BTC #USDT