If you go back to review the technical documentation of Plasma or the 'research reports' from KOLs, you will likely see a highlight: Plasma introduces Ethereum's EIP-1559 mechanism. This means there will be a 'burn' model. This immediately gave the market a 'deflationary expectation,' and many people associate it with Ethereum's 'Ultrasound Money' narrative, thinking it could also become 'deflationary' in the future.
To be honest, this design is very appealing to token holders. I initially thought it was a good value capture mechanism. However, when I looked at this mechanism alongside the 'Paymaster subsidy' we discussed in previous articles last weekend, I discovered a fundamental contradiction.
First, what is EIP-1559 for? Essentially, it is a reform of the Gas fee market. It divides the Gas fee into two parts: a dynamically adjusted 'base fee' and a 'tip' for validating nodes. The key point is that the 'base fee' will be directly destroyed, rather than paid to the nodes.
The core of this design is: as the network becomes more prosperous and users pay more Gas fees, the amount destroyed will be larger. If the amount destroyed exceeds the inflation of the PoS staking output, the token will achieve 'net deflation.'
Sounds perfect, right? But the problem lies in the 'foundation' of Plasma.
In our data mining from the seventh article, we concluded that over 95% of transactions on the Plasma chain are 'USDT zero Gas' transfers.
In the sixth article, we also dissected the Paymaster mechanism, concluding that the Gas fees for these transactions are covered by the foundation using its 40% 'ecological fund' (i.e., pre-mined tokens).
Now, putting these two conclusions together with EIP-1559, a contradiction arises:
First, if a user has not paid $XPL for Gas fees, how can they 'destroy' it?
Second, if it is the foundation's Paymaster that is footing the bill, is it 'destroying' from its own treasury? This doesn't make sense in economic models. You can't expect a project to 'pay with one hand and burn its own hand with the other' to create a false 'deflation.'
My research indicates that the more likely scenario is: the Paymaster pays the validating nodes, which is very likely just the 'tip' part, while the 'base fee' that should have been 'destroyed' may be directly exempt in 'zero Gas' transactions.
What does this mean?
It means that the highly anticipated 'deflation engine' of EIP-1559 is stalled in 95% of the 'active' scenarios on the Plasma chain. It is not working at all.
So when does it work? Only in the remaining 5% of 'real payment' scenarios—specifically, when developers and users deploy contracts and interact with DeFi, a small portion of the 'base fee' will be truly destroyed from the Gas fees they actively pay.
As we have already uncovered in the seventh article, the real paid business of 5% generates a total Gas fee of only a few thousand dollars daily. This 'amount destroyed' is negligible compared to the annual 5% starting inflation of PoS (used to reward validating nodes).
The EIP-1559 mechanism of Plasma, under the suppression of the core strategy of 'USDT zero Gas,' currently appears to be merely ornamental. It has basically no impact on the supply and demand of $XPL at this stage.
This 'deflation' narrative, like the 'value capture' we discussed in the fourth article, has become a 'future tense.' It entirely relies on that '5%' real application ecosystem, whether it can miraculously grow 100 times in the future, to cover the '95%' subsidized users. Before that day arrives, do not be fooled by the story of 'deflation' being necessary.
