Quick Takes
- Stablecoin network infrastructure provider Plasma has raised $20 million in a Series A funding round to develop a sidechain on the Bitcoin network that will support USDT stablecoin and Ethereum Virtual Machine-compatible (EVM) applications.
- The project aims to address the issues curtailing stablecoin transactions on traditional blockchains, such as high fees and lack of scalability. Plasma will leverage Bitcoin’s security to allow users to conduct zero-fee USDT transactions.
- The company is backed by Palantir founder Peter Thiel and Tether CEO Paolo Ardoino, alongside other crypto VC firms including Framework Venture, Bitfinex, Bybit, Split Capital, and Nomura.
- Tether is working on supporting USDT transactions on Bitcoin by integrating it with the Lightning Network – Bitcoin’s layer-2 scaling solution for faster and cheaper transactions.
Plasma, a crypto startup backed by Palantir founder Peter Thiel and Tether CEO Paolo Ardoino, has announced that it raised $20 million in a Series A funding round led by venture capital firm Framework Ventures.
According to a statement released by the company, it will use the capital injection to support the launch of the Plasma testnet and mainnet and the expansion into remittances, payments, and DeFi applications.
Stablecoin Startup Raises $20 Million In Series A Round To Develop EVM-Compatible Sidechain On Bitcoin
The latest investment follows an earlier $4 million round from October 2024 participated in by the company’s angel backers and advisors including Bitfinex, Paolo Ardoino, Peter Thiel, and Split Capital – a crypto venture capital firm founded by prominent trader Cobie and Zaheer Ebtikar. Other notable backers for Plasma include DRW/Cumberland, Bybit, 6th Man Ventures, and Nomura.
The Plasma network is designed to operate as a sidechain on the Bitcoin network and will be fully compatible with the Ethereum Virtual Machine (EVM) – which underpins a large portion of decentralized finance activity. The project’s developers aim to address the challenges faced by stablecoins on existing blockchains, such as high fees and scalability.
Plasma will leverage Bitcoin’s security and support zero-fee Tether USD (USDT) transactions, which will be a revolutionary prospect for DeFi (Decentralized Finance) ecosystems and will help solve some of the key market challenges.
Paul Faecks, the founder and CEO of Plasma, said in a statement that stablecoins are the “clear winner” in blockchain adoption, yet these assets are treated as “second-class citizens” on major blockchains. He claimed that by deploying Plasma’s purpose-built ecosystem and infrastructure for stablecoins on the Bitcoin network, the company will be able to deliver one of the most secure, scalable, and efficient blockchains for stablecoins.
Stablecoins are the most traded cryptocurrencies in the market as they provide liquidity and facilitate conversions between crypto and fiat currencies. Their total supply is worth $220 billion. Stablecoins are widely used for everyday crypto payments and savings. Tether’s USDT dominates the stablecoin market, accounting for 70% of the total volume, with a market capitalization of over $139 billion.
While Bitcoin is the longest-running blockchain, most of the stablecoin activity takes place in other chains like Ethereum, Solana, Tron, and BNB.
Tether Set To Launch USDT Stablecoin On The Bitcoin Network
However, this is all set to change as Tether is set to launch its dollar-backed USDT stablecoin on the Bitcoin blockchain, according to an announcement made by the company’s CEO onstage at a Bitcoin conference in El Salvador last month.
USDT will soon be fully functional across Bitcoin and the Lightning Network, which is a scaling blockchain built on top of Bitcoin. This integration marks a significant milestone for both Tether and Bitcoin. USDT is used by millions of people worldwide as a secure form of payment that links traditional finance with the crypto market. Meanwhile, BTC is the world’s most valuable and influential crypto asset, boasting a market cap of $1.9 trillion.
However, one issue with the Bitcoin blockchain has been its lack of support for decentralized applications (DApps), leading investors to approach it as a commodity and store of value. Scaling technologies like the Lightning Network have helped make BTC transactions cheaper and faster, and it will soon incorporate highly liquid assets like USDT.
Lightning Labs, a Bitcoin infrastructure development firm, developed the protocol that will allow USDT to be integrated into Bitcoin via the Lightning Network. The company’s CEO Elizabeth Stark stated that the event will “mark a new era for stablecoins” and allow millions of people to use the “most open and secure” blockchains to send dollars globally. USDT is currently available on 17 blockchains and maintains a constant 1:1 peg with the USD dollar.
