Plasma, a cryptocurrency startup backed by notable investors such as Paolo Ardoino and Peter Thiel, has secured $24 million in funding to develop a blockchain centered on USDT, a stablecoin pegged to the US dollar. This blockchain will operate as a layer 2 network on the Bitcoin protocol, offering USDT transactions without commissions. The company’s vision is to create a platform that addresses the existing challenges faced by stablecoins on current blockchains, including high fees and scalability limitations.
The funding, which includes a $20 million series A round led by Framework Ventures and participation from Bitfinex, brings the company’s total capital raised to $24 million. Plasma’s founder and CEO, Paul Faecks, emphasized the importance of leveraging Bitcoin’s security to provide zero-fee transactions for USDT, the largest stablecoin with a market capitalization of over $140 billion.
Key Features of Plasma’s Blockchain
Plasma’s blockchain will be designed as a side chain or layer 2 (L2) of Bitcoin, with full compatibility with the Ethereum Virtual Machine (EVM). This architecture will enable the platform to take advantage of Bitcoin’s security while providing a scalable and low-cost environment for USDT transactions. The company’s objective is to address the challenges facing stablecoins in existing blockchains, such as high fees and scalability limits.
As Faecks noted, “By leveraging Bitcoin as the base, USDT transfers will have zero tariffs.” This development is significant, given the growing importance of stablecoins in the cryptocurrency market, which have become a dominant force with a circulating supply exceeding $220 billion. Stablecoins are often used as a payment or savings instrument, as well as a direct on-ramp to cryptocurrencies like Bitcoin.
The news of Plasma’s funding and blockchain development comes after Tether announced the expansion of USDT to the Bitcoin ecosystem. USDT is already the largest stablecoin and the third-largest cryptocurrency by market capitalization. With the incoming administration in the United States promoting the development and growth of dollar-backed stablecoins, Plasma believes that stablecoins will play a crucial role in the global domain of the US dollar over the next decade.
As the cryptocurrency market continues to evolve, innovations like Plasma’s blockchain are poised to shape the future of stablecoins and their role in the global financial system. However, it is essential for investors to exercise caution and stay informed, as investments in crypto assets are not regulated in some countries and may not be suitable for retail investors.
