A New Crypto Project Vowed to Transform Stablecoins. Then Its Token Crashed 90%

When Plasma, a Layer 1 for stablecoins, rolled out its mainnet in late September, it arrived on a wave of bullish enthusiasm. Its token sale had pulled in an impressive $500 million — ten times the original allocation — and the project positioned XPL, its native token, as the latest entrant in crypto’s favorite category of 2025: stablecoin infrastructure.

The pitch had all the familiar buzzwords often associated with new blockchains: high throughput, instant payments, seamless scalability. It touted partnerships with big names in crypto, including blockchain analytics firm Elliptic, and integrations with platforms like Binance Earn and Chainlink Scale. On paper, it had everything it needed to take the stablecoin sector by storm. Instead, Plasma delivered what may go down as one of the biggest token debut flops of the cycle.

According to CoinMarketCap, XPL reached an early high of roughly $1.67 on Sept. 27, three days after it went live, giving Plasma a market cap north of $2 billion. But by late October, CoinDesk reported the token had crashed more than 80%, slipping to roughly $0.31. In the weeks that followed, the slide continued: XPL touched the $0.18–$0.20 range, where it trades today, an 88–90% drawdown from its early peak.

Now, with the token stabilizing, but far from recovering, the question facing investors is straightforward: Has XPL finally bottomed out, or is the worst still ahead?

A hype-driven launch meets an unforgiving market

Part of what made the initial XPL surge so dramatic was the scope of the narrative surrounding Plasma. The Milan, Italy-based team had spent less than a year building the chain from ideation to production, a speed the company itself acknowledged required trade-offs in maintainability and scalability.

Regardless, the pitch still resonated: a purpose-built chain for stablecoin settlement, zero-fee USDT transfers, and a payments stack that would give users a self-custodial card and banking-like experience.

That vision spurred activity within the heavily oversubscribed public sale and subsequent speculative price action on exchanges, although it was all short-lived.

The crypto market has always been fickle; traders are known to hop between sectors in order to make the most money, and that lack of loyalty, coupled with a lack of any onchain catalysts, led to XPL’s extended drawdown.

At the time of writing, Plasma is recording just 3.6 transactions per second (TPS) over the past 10 minutes. It’s worth noting that this metric can only reach its full potential once hordes of people actually use the blockchain, but still — it’s a far cry from the 1,000 TPS potential it once touted.

At the same time, XPL’s tokenomics left room for concern, as some social media users pointed out. Roughly 1.8 billion tokens were circulating at launch, about 18% of the 10-billion total supply. With substantial allocations set aside for team, investors and ecosystem incentives, traders understood that future unlocking events could add additional supply pressure over time.

These factors of thin usage, high expectations and a large circulating supply, combined to make XPL extremely vulnerable to a sharp repricing once early enthusiasm faded.

It’s looking more and more like that’s the exact scenario that has played out: with XPL possibly bottoming out, short-term traders have moved on, leaving behind only the loyal holders that are willing to wait for development to occur — stranding XPL in dangerous territory.

The November update: Building while the chart bleeds

Earlier this month Plasma released a detailed November update, outlining seven weeks of post-launch engineering, infrastructure and operational work. Investors found the message frustrating: while the team insisted it was working hard, the update lacked any catalysts to lift the XPL token out of the doldrums.

A few standard updates, including a codebase refactor, testing expansion and a rebuild of a standard peer discovery layer (in simple terms: a user bug reporting system), left a lot to be desired, but the company’s main focus is “Plasma One,” the payments and wallet product meant to define the ecosystem’s real-world use case.

The Plasma One wallet — which is effectively a neobank that has yield-bearing capabilities based on stablecoins — has been touted as the product that has the potential to set Plasma apart from its peers. it’s e, However, the update didn’t translate into meaningful onchain activity, at least as visible from block-explorer data. For now, investors have a promise of utility, not utility itself.

What’s going on behind the scenes?

One of the criticisms often directed at Plasma has been a lack of communication from the team, which, despite the November update, has largely been perceived as absent. Because crypto trades 24/7, failure to communicate can cause token prices to plummet.

The majority of companies backing large-cap altcoins employ a social media team, which often falls in line with the retail trader crypto audience. Plasma, on the surface, appears to act more like a traditional bank and communicates via monthly updates that resemble the type of communication public companies publish during quarterly earnings reports.

CoinDesk attempted to bridge this communication gap on numerous occasions. After almost two weeks of back and forth with the Plasma team, via an external spokesperson, progress was finally made. Plasma agreed to a video interview with CoinDesk despite early suggestions that a written interview would be sufficient.

Then, on the eve of the interview, the Plasma team backed out with no explanation, simply stating: “Apologies, but Hans [Behrens, CTO of Plasma] is unavailable for the interview, so we will need to cancel tomorrow’s meeting. Apologies again for the inconvenience. If you’d like to pivot to a written interview we would be happy to facilitate.”

CoinDesk reluctantly agreed and sent over a list of questions, focusing on Plasma’s roadmap and some of the concerns directed at the team.

To which a spokesperson representing Plasma responded: “Thank you for sending those questions through. Apologies for the back and forth, however, Plasma isn’t in a position to comment at the moment. If and when that changes, we’ll be in touch.”

So what is the deal at Plasma? The truth is, no one knows, because Plasma isn’t telling.

In response to a request for comment, Plasma told CoinDesk on Wednesday that the “team will share updates and are equally open to media engagement when we have significant product developments to share and progress made towards that vision.”

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