Expanding the Empire of Stablecoins: Tether's New Developments

As a giant in the stablecoin industry, Tether can generate an annual profit of 13 billion USD solely from government bond interest, making it one of the most profitable fintech companies in the world. However, when reviewing its business model, Tether found that although it has made considerable profits from the issuance and management of USDT, the true "on-chain economic dividends" have not been realized.

In the Gas fees collected by Ethereum every day, USDT contributes nearly $100,000, accounting for more than 6% of the total Ethereum transaction fee consumption. On the other hand, Tron is the main stage for USDT value capture. According to the latest on-chain data, the transfer volume and Gas consumption of USDT on Tron account for over 98% of this public chain, and the trading activity on Tron almost entirely relies on USDT.

The Tron network currently generates over $2.1 million in on-chain revenue daily, with an annualized income reaching $770 million. The vast majority of this comes from high-frequency transfer fees of USDT. The number of on-chain transactions on Tron within 24 hours has reached 2.46 million, with an average transaction fee of about $0.85, which is basically consistent with the average on-chain fee rate of USDT. Currently, the overall market capitalization of Tron has exceeded $25 billion, and its stable on-chain revenue scale has consistently ranked among the top of major public chains.

For Tether, this is a typical "value capture imbalance". The issuance and brand of USDT have brought enormous user traffic and industrial-level stable demand, but all on-chain fees and ecological dividends have long been "taxed" by the infrastructure, rather than being dominated by Tether. This not only weakens Tether's strategic discourse power in the future on-chain payment and settlement network but also causes it to lose initiative when facing new threats such as self-developed stablecoins from Tron or even traffic diversion.

If Tether only satisfies itself with being a "super mint" for stablecoins and does not have a dominant influence on on-chain infrastructure, its future value ceiling will be extremely limited. This is also the fundamental reason why Tether is fully committed to its own stablecoin chain ecosystem. Through the exclusive chain model, Tether can not only "recapture" the massive transaction fees and ecological dividends that originally flowed to public chains like Ethereum and TRON back into its own system, but also establish its own on-chain closed loop in areas such as B2B payments, compliant settlements, and industrial collaboration.

More importantly, TRON is currently trying to reduce its reliance on USDT. Recently, TRON launched the USD1 stablecoin. The founder of TRON is also an advisor to this DeFi project, and these complex relationships seem to suggest that TRON may intend to gradually decrease its use and issuance of USDT in the coming years.

In addition, from the perspective of transaction fee costs, the advantage of TRON as a stablecoin settlement network is gradually diminishing. Without purchasing and burning TRX, the current fee for each transaction on TRON even exceeds that of the traditionally expensive Bitcoin network, and is also higher than that of the Ethereum mainnet, Apots chain, and BNB chain.

This is not a good thing for USDT, as the fee for transferring USDC via the Base network is only $0.000409 in comparison. Even the Circle Paymaster feature launched by Circle allows users to pay gas fees using USDC on the Arbitrum and Base networks.

Therefore, these trends and competitive threats force Tether to adjust its business strategy as soon as possible.

Plasma: The Source of Anxiety for Tron

Tether's first step was to quietly support a new chain called Plasma by the end of 2024.

At first, there were just a few announcements and some financing -- Bitfinex(, the parent company of Tether), Peter Thiel's Founders Fund, Framework, and other capital injected a total of $24 million, and then brought in another $3.5 million in external funding, pushing Plasma's valuation to $500 million in just two months.

Plasma uses the Bitcoin mainnet as the final settlement layer, inheriting the security of UTXO, while directly being compatible with EVM at the execution layer. Most importantly, all on-chain transactions can be paid for gas directly with USDT, making USDT transfers completely free.

It is precisely because of the simple and direct selling point of "zero fees" that when the official recently released the governance token XPL quota allowing users to deposit liquidity, the first batch of five hundred million dollars was snatched up in just a few minutes, and the additional five hundred million dollar deposit limit was sold out within 30 minutes. Some large investors even paid gas fees of one hundred thousand dollars on the Ethereum mainnet to seize the opportunity. This shows the market's desire for a "no-fee stablecoin chain."

In addition to the technical architecture, Plasma has quietly included two chips. The first is "native privacy." On-chain transfers are public by default, but if users need to conceal addresses and amounts, they can simply check an option in their wallet to enter a shielding mode; in the event of audits or compliance requirements, selective disclosure is also possible. The second is "Bitcoin liquidity." Plasma promises to seamlessly bring native BTC onto the chain through permissionless bridges, and with Tether's deep dollar pool, low-slippage exchanges and BTC collateralized borrowing of stablecoins can all be completed in the same environment.

All of this resonates perfectly with Tether's actions of "stacking Bitcoin" over the past year. The Plasma team and Bitfinex partners have long been advocates of Bitcoin.

At the center stage of the 2025 Bitcoin Conference, Tether CEO Paolo Ardoino stated, "Bitcoin is my Wukong, it is our friend."

In the spring of 2025, Tether announced that it would become a major shareholder of Twenty One Capital, a bitcoin financial company that went public on NASDAQ through a merger and acquisition, similar to MicroStrategy.

Tether invested $458.7 million to increase its holdings in BTC, and transferred 37,000 bitcoins to a new address, providing ammunition for Twenty One Capital. Currently, Tether and Twenty One Capital together hold approximately 137,000 bitcoins, ranking third among all publicly traded companies holding bitcoins, only behind MicroStrategy and mining company MARA Holdings.

The outside world was originally puzzled about what Tether was aiming for by converting stablecoin profits into "digital gold". Now the answer is becoming clear: USDT is used as a settlement currency, while BTC serves as a reserve asset. The two merge in Plasma, gathering the 150 billion USDT scattered across more than a dozen networks into a unified settlement layer, allowing transfers, exchanges, and redemptions to occur on Tether's own territory.

At the time of the mainnet beta release, Plasma will rank as the ninth largest blockchain globally in terms of stablecoin liquidity, valued at $1 billion.

In the past, Tether had to follow the pace of Ethereum and Tron. Once the other party increased fees or changed rules, USDT could only passively adapt, and the infrastructure supporting USDT, such as settlement, execution, and bridging, ( was largely beyond Tether's control. Now, Plasma has integrated issuance, circulation, and recycling into its own ecosystem, and Tether will gain more pricing power and influence, logically grasping the toll gate of this network.

How much can Plasma earn for Tether in a year?

Although Plasma offers zero fees for USDT transfers, it does not mean that Plasma has no income.

The reason Plasma dares to tell users "USDT transfers are completely free" is not because Tether subsidizes it with real money, but because it divides all transactions into two billing methods based on complexity and priority. To express it in a simple way, it's like saying "Children under 1.2 meters are free."

Ordinary USDT transfers occupy a small block, just like "children under 1.2 meters tall"; nodes directly package these transactions into blocks without charging users Gas. However, to prevent spam transactions, Plasma has a basic throughput limit. At the same time, to avoid malicious transaction spamming, users also need to leave a small deposit on-chain, which acts as collateral: once the abuse threshold is triggered, this deposit will be automatically confiscated. This way, the "free" experience is preserved, and spam traffic is blocked.

Requests that go beyond simple transfers, which involve more complex operations like invoking multiple contracts in one call, batch settlements, and institutional-level rapid settlements, will be recognized by the system and require payment of fees. The main income for Plasma nodes comes from this, along with small transaction fees collected from cross-chain asset transfers and custodial services, giving the entire network a self-sustaining ability. Furthermore, since simple transfers are no longer charged, the pricing model can be more flexible: based on current on-chain estimates, thousands of free payments per second consume very low resources, allowing nodes to cover costs and maintain a surplus with a small amount of high-level business.

The mechanism is supported by Plasma's "dual-layer framework." The underlying layer periodically anchors the block state back to Bitcoin, outsourcing security to Bitcoin's proof of work; the upper layer is directly compatible with EVM, allowing developers to migrate Ethereum contracts to run seamlessly. After removing traditional Gas calculations, the execution efficiency is even higher. A certain evaluation report mentioned that Plasma's improved consensus can stably handle thousands of payment transactions on a single-core CPU during stress testing, and the rewards for nodes come entirely from that portion of complex transactions.

So how does Plasma make money? The answer is already apparent.

First, enterprise-level "dedicated line" -- if a cross-border remittance company or game publisher wants to push transfers from millisecond level to sub-millisecond level, they must enter the paid lane and pay a fixed monthly fee in USDT to ensure bandwidth.

Second, contracts and batch settlement -- DeFi protocols call complex logic and still need to pay Gas, but the pricing unit has changed from ETH to USDT.

Thirdly, bridging and custody -- when transferring assets from other chains to Plasma or redeeming from Plasma, a small export tax must be paid. This money goes into the Plasma treasury and is then distributed to nodes and the foundation according to the rules.

Fourth, governance token XPL inflation -- validators staking XPL receive block rewards, with a portion kept in the Plasma treasury to be auctioned over time, used for continuous subsidies for 0 gas payments of peer-to-peer USDT.

The four combined are enough to subsidize the network costs of free transfers, and may even bring a whole new cash flow for Tether.

If Plasma can successfully capture the majority of the USDT traffic currently running on Tron and Ethereum, the first direct income will be the majority of the on-chain fees intercepted by Tron and Ethereum—annual revenue could reach about 1 to 2 billion dollars. Additionally, with enterprise services and cross-chain fees, the new revenue range is expected to reach 1.2 to 3 billion dollars.

However, due to Plasma's exemption from ordinary USDT transfer fees, it is conservatively estimated that Plasma can bring Tether an annual revenue of 1 billion US dollars.

Moreover, Plasma may have other implicit benefits and ecological spillovers: for example, attracting new large liquidity and project participation, collecting certain "taxes"; providing SDKs, enterprise node access, and charging commercial fees for on-chain applications, etc.

Comparing this new cash leg with Tether's existing ledger makes it more intuitive: In 2024, out of Tether's approximately $13 billion in revenue, $7 billion comes from government bond interest, $45 million comes from a 0.1% issuance/redemption fee, and nearly $6 billion is from investment gains in Bitcoin, gold, and early projects. This means that Plasma could possibly raise Tether's annual profit by another 15% - 20%.

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Stable: A USDT L1 dedicated chain tailored for institutions

After Plasma embraced the liquidity of large holders and the developer ecosystem on these chains, Tether did not stop there. This month, an L1 chain supported by the unified liquidity protocol USDT0 from Bitfinex and USDT was officially announced, with Tether's CEO Paolo Ardoino as the advisor for the project.

Unlike Plasma, which is a Bitcoin L2, Stable is an L1 chain. Although it also uses USDT as gas and offers free peer-to-peer USDT transfers, it targets a completely different audience: global financial institutions, corporate settlements, bulk clearing, on-chain corporate finance, B2B cross-border transactions, rather than catering to retail or small-scale scenarios.

The Stable internal test network is currently online, and the team is guiding early construction.