Of the handful of major stablecoins, a type of cryptocurrency designed to maintain value in line with the U.S. dollar, one has managed to nearly corner the market. Tether controls 70% of the industry, pulling in $13.7 billion in profits last year.
Because of this, Paul Faecks, cofounder of stablecoin company Plasma, is building a blockchain tailored specifically to the most popular stablecoin that it hopes to introduce in the coming months.
The blockchain is intended to attract stablecoin users by offering zero-fee Tether transactions, he said in a recent interview with Fortune. On Thursday, the company announced it has raised $24 million in its first funding round. The investment was led by Framework Ventures with participation from crypto exchange Bitfinex, prominent venture capitalist Peter Thiel, and Tether CEO Paolo Ardoino.
While Tether can be traded on blockchains like Solana, Tron, Polkadot, and even Bitcoin via the Omni Layer—a software layer built on top of Bitcoin to allow for additional capabilities—Faecks said Plasma makes the process quicker and more cost-efficient. Stripping away the fancy services that some blockchains try to cater to—including NFT trading, memecoins, token airdrops, or decentralized voting—increases Plasma’s ability to process the rapid rate of stablecoin transactions. Stablecoins are often used to settle cross-border payments. “You’re just capable of making very different trade-offs if all you care about is, how can we be the best product for stablecoins,” he said.
Faecks chose to build on top of Bitcoin’s blockchain because it’s considered one of the safest and most decentralized available, he said. While the two chains are connected, Plasma has its own consensus mechanism—a set of rules that determine the blockchain’s scalability, security, and decentralization that each computer on the blockchain follows.
Faecks said his custom consensus mechanism lets a vast number of transactions be settled quickly and without fees: “That is what we’re optimizing for, and that requires quite a bit of custom building on the execution logic, but also on the consensus.”
Despite not charging a fee for each stablecoin transaction, Faecks says he’s unworried about the company’s balance sheet. Plasma will support other services like Curve, Ethena, and Aave, which will charge a fee, he said: “This is very much a scale business, and not a ‘need to make $18 and validate our revenue per transaction’ type business.”
Faecks said the money raised in this round will be used to launch the Plasma blockchain early in the second quarter of this year. He declined to disclose the company’s valuation.
