Plasma Network has raised $3.5 million in a funding round led by Bitfinex to enhance access to Tether’s USDT stablecoins on Bitcoin. The round also saw participation from high-profile investors, including Christian Angermayer, and venture firms such as Split Capital, Anthos Capital, Karatage, and Manifold Trading.
This initiative aims to reintroduce USDT to Bitcoin after the Omni Layer—a Bitcoin-based platform that supported USDT—was discontinued in 2023.
Bridging Bitcoin and Ethereum for Stablecoin Payments
Plasma will launch as an Ethereum Virtual Machine (EVM)-compatible sidechain, allowing Ethereum-compatible smart contracts to run seamlessly while settling transactions on Bitcoin. This solution aims to maintain Bitcoin’s immutability while offering USD-denominated payment flows on the Bitcoin network.
“Bitcoin isn’t going to change,” said Paul Faecks, Plasma’s founder, expressing skepticism towards Bitcoin’s native smart contract experiments like OP_CAT and covenants.
Plasma’s strategy focuses on zero-fee payment rails for USDT, addressing inefficiencies in the traditional payments industry. Though it could support decentralized finance (DeFi) applications such as Aave or Uniswap, its initial focus is on expanding USDT’s utility.
A Unique Sidechain with Bitcoin Integration
Plasma offers a novel blockchain structure, combining Bitcoin’s UTXO-based model with Ethereum’s account-based model. The platform allows gas fees to be paid in BTC and opens the possibility of staking Bitcoin to earn yield, providing flexibility for Bitcoin’s execution environment.
Hans Behrens, Plasma’s CTO, highlighted the chain’s efficiency:
- Three times higher throughput than leading Nakamoto protocols
- Six times lower latency
- Real-time difficulty adjustments allowing 2,000 transactions per second, inheriting Bitcoin’s security while improving speed
The network will initially launch as a permissioned sidechain, with federated multi-signature governance involving a prominent crypto custodian.
Broader Vision for DeFi and Beyond
While Plasma’s current focus is on facilitating USDT payments, Faecks noted that the team is exploring expansion to the Cosmos ecosystem as a potential future strategy.
“USDT is an attractive asset for payments,” Faecks said. “Our initial focus is increasing access to it, but the platform can also accommodate DeFi, real-world assets (RWA), and other use cases.”
With Tether’s USDT holding a market capitalization of around $120 billion, Plasma’s development marks a significant step toward reintroducing stablecoins on Bitcoin while leveraging advanced blockchain capabilities for greater efficiency and scalability.
