Stablecoin blockchain raises $20 million
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Plasma, a startup behind a blockchain built specifically for payments with stablecoins, has raised a fresh $20 million in a Series A funding round.
Why it matters: Stablecoins are the killer app of blockchains, so much so that regulating them has become a top priority for Congress.
How it works: Stablecoins are digital assets designed to hold a pegged value. That's achieved through backing by a real-world asset, usually dollars or very secure related assets, such as U.S. Treasuries.
- The main thing people use them for is crypto trading, and they're popular for investing in decentralized finance.
- We're starting to see hints of other uses, however, and the Plasma team believes the time is right for a purpose-built chain with payments in mind.
The big picture: Over $160 billion has been committed to the stablecoin economy, and stables are running trillions of dollars in transactions each year.
- But they're running on blockchains that aren't ideal for global payments.
Zoom in: The two main blockchains that run stablecoins are Ethereum and Tron. And both have issues:
- Ethereum can be wildly more expensive to use than traditional transactions (it's running $0.52 per expenditure, these days, on average).
- Tron is much cheaper to use, but its history is fraught. Circle, the company behind the second biggest stablecoin, USDC, discontinued support for Tron last year.
Plasma is being designed as a sidechain of Bitcoin, but with the full programming functionality Ethereum is known for.
What they're saying: "Stablecoins are the clear winner in blockchain adoption, yet they're treated as second-class citizens on current blockchains," Plasma CEO Paul Faecks said in a statement.
- "With strong growth in both supply and users, we are entering a new phase of mainstream adoption for stablecoins," Paolo Ardoino, the CTO at Plasma investor Bitfinex and CEO at Tether, said in a statement.
Follow the money: The A round is being led by Framework Ventures.
- A previous $4 million seed round included backing from several parties, including cofounder Christian Angermayer; Ardoino and Bitfinex; PayPal co-founder Peter Thiel; and Cobie, a famous trader and crypto podcaster.
Fun fact: Tether started on its own blockchain, Omni, but it quit supporting it in 2023 as other transport layers had more demand.
- Everything changes fast in crypto, however. And it seems investors are ready to bet that more use cases will be found for these instruments soon.
What we're watching: Stablecoin legislation in the United States, and the extent to which traditional financial institutions will be permitted to interact with blockchains.
Editor's note: The headline of this article was updated to reflect the size of the Series A funding round.
