Plasma Struggles to Reclaim Post-TGE Momentum

Stablecoin-focused Layer 1 blockchain Plasma debuted its XPL token two weeks ago, and following an impressive post-TGE surge to a $17 billion fully diluted valuation (FDV), the token has since been bleeding.

XPL launched on Sept. 25 and doubled from its opening price of roughly $0.8 to a high of $1.67 in the following days, rewarding ICO participants with a 3300% return on their investments.

However, since that peak, the token has struggled and currently trades at $0.87, or an $8.7 billion valuation, a 47% drop from its all-time high. The token has greatly underperformed the broader market, with BTC rising almost 12% between Sept. 27 and Oct. 4 while XPL plunged 49%.

XPL Chart – CoinGecko

It is unclear whether there is a specific catalyst for the token’s muted performance after such an explosive start, and Plasma’s representatives referred The Defiant back to founder Paul Faecks’ X post, where he denied allegations that the Plasma team sold tokens or that controversial market-making firm Wintermute was involved.

While Faecks has ruled out any potential foul play, some contributing factors to the selloff could include liquidity incentive emissions, which payout more than $1 million per day in XPL, or ICO whales selling large quantities of tokens, as the sale structure controversially allowed individuals to purchase up to 10% of the initial $500 million cap.

As a result, the first Plasma ICO vault filled instantly, and the team increased the deposit cap from $500 million to $1 billion while still allowing individual investors to purchase massive quantities of the token, which were completely unlocked on Sept. 25.

Key Metrics Remain Strong

Despite the token’s struggles over the last week, the network itself continues to grow, and is now the sixth largest ecosystem in DeFi with $6.4 billion in total value locked (TVL), particularly led by its Aave vaults, which command $4.5 billion, or 70% of the chain’s DeFi TVL.

The lending vault currently offers users more than 8% APY, but the yield was as high as 50% at TGE and 20% the day after, with rewards distributed from Plasma, Aave, and Veda.

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