When Plasma’s XPL token was issued a month ago, crypto investors were eager to purchase a slice of the new blockchain designed for stablecoins.
But although stablecoins have been a dominant theme throughout this bull cycle, Plasma has failed to live up to the hype; with XPL having now lost more than 80% of its value since the short-lived peak of $1.67 reached in September.
XPL is currently trading at $0.309 after falling 13.6% in the last 24 hours alone, leading to liquidations of around $8 million.
It is now at risk of completely disappearing from the top 100 crypto tokens with a market cap of just $550 million, with the 100th maintaining a market cap of $540 million.
What went wrong?
Investors will be wondering where it all went wrong. Plasma was one of the most high-profile projects of the year, backed by Bitfinex, Framework Ventures and Jordan Fish (Cobie) in two funding rounds that saw it raise $24 million, according to Icodrops.
Then there was the public sale, in which $50 million was raised after selling 1 billion tokens for $0.05 each. These buyers remain largely profitable, but the same cannot be said of those who purchased XPL on the exchanges when it went live in September.
Sentiment plummeted just after it debuted with allegations that Team Plasma was engaging with market makers to short the XPL token, thereby locking in profits.
Plasma founder Paul Faecks refuted these claims in a tweet that said: “No team member sold XPL. All investors and the XPL team are locked in for 3 years with a 1 year cliff.”
“We have not engaged Wintermute as a market maker and have never contracted with Wintermute for any of its services,” he continued. “We have the same information as the public about Wintermute’s ownership on XPL.”
Veteran trader Alex Wice challenged Faecks on his tweet, writing: “Did you engage with another market maker to short xpl, effectively ‘locking in’ profits?” Yes or no,” to which Faecks did not respond.
Nonetheless, relentless selling pressure persists and muted demand means the XPL token has continued to make new lows.
On-chain metrics
The Plasma blockchain was designed to be the blockchain of stablecoins, offering fee-free transfers and high throughput.
In practice, it has become a lending protocol; The Plasma website has a “loan vault” that currently has a total value locked (TVL) of $676 million, offering approximately 8% annual yield.
Currently, the primary use case for XPL tokens is to reduce fees for non-stable coin transfers, with XPL staking and delegation planned for Q1 2026.
The Plasma website shows figures of over 1,000 transactions per second (TPS), while in reality the Plasma block explorer shows a current figure of only 14.9 TPS, partly due to lack of activity.
To its credit, Plasma claims to offer sub-second block times, and on the surface, new blocks are created every second, although many of these blocks contain only a handful of transactions.
What future for XPL?
The XPL token will likely offer more use cases in early 2026 when staking becomes active. But until then, investors need a stimulus to drive demand, and without that, XPL may well fade into obscurity as the hype continues to fade.
XPL has become a double-edged sword, one of the reasons to own XPL is to reduce transaction fees, but for a blockchain designed to offer zero fees on stablecoin transfers and minimal fees on other tokens, there is no need to own
Perhaps demand will increase once Plasma launches its “Plasma One” card, but for now it remains hopeless in terms of price action and relevance.
