When Plasma’s XPL token was issued a month ago, crypto investors were buying part of the new blockchain being built for stablecoins.
However, despite stablecoins being a dominant theme throughout this bull cycle, Plasma failed to live up to the hype; with XPL now shedding more than 80% of its value since September’s brief high of $1.67.
XPL is currently trading at $0.309 after falling 13.6% in the last 24 hours alone, bringing about $8 million in liquidations.
It is now at risk of falling out of the top 100 crypto tokens altogether with a market cap of just $550 million, with the 100 largest maintaining a market cap of $540 million.
What went wrong?
Investors will wonder where it all went wrong. Plasma was one of the most hyped projects of the year, backed by the likes of Bitfinex, Framework Ventures and Jordan Fish (Cobie) across two funding rounds that saw it raise $24 million, according to Icodrops.
Then there was the public sale where it raised $50 million after selling 1 billion tokens at $0.05 each. Those buyers remain well in profit, but the same cannot be said for those who bought XPL on exchanges when it went live in September.
Sentiment fell right after the debut with claims that the Plasma team was in dialogue with market makers to short the XPL token, effectively locking in profits.
Plasma founder Paul Faecks denied these claims in a tweet that read: “No team members have sold any XPL. All investors and team XPL 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 their services,” he continued. “We have the same information as the public about Wintermute’s ownership of XPL.”
Veteran trader Alex Wice challenged Faecks on his tweet, writing: “Have you engaged with another market maker to short xpl, effectively ‘locking in’ profits? Yes or no,” to which Faecks did not respond.
Nevertheless, relentless selling pressure remained and muted demand has seen the XPL token continue to form new lows.
Onchain metrics
Plasma blockchain was designed to be the blockchain for stablecoins, offering zero-fee transfers and high throughput.
In practice, it has become a lending protocol; The Plasma site has a “lending box” which currently has $676 million in total value locked (TVL), yielding around 8% annualized returns.
Currently, XPL tokens are mainly to reduce fees for non-stablecoin transfers, with XPL staking and delegation scheduled for Q1 of 2026.
The Plasma website boasts figures of more than 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 the lack of activity taking place.
To its credit, Plasma claims to offer sub-second block times, and on the surface, new blocks are created every second, despite many of those blocks containing only a handful of transactions.
What next for XPL?
The XPL token will likely provide more of a use case in early 2026 when the stake becomes active. But until then, investors need a stimulus to drive demand, and failure to do so could well see XPL 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 reason to own XPL as it is already very cheap to use the chain.
Perhaps demand will pick up when Plasma rolls out its “Plasma One” card, but for now it’s still a desperate situation in terms of price action and relevance.
