The stablecoin-focused Layer 1 blockchain Plasma, which recently launched its native token XPL, is facing sharp price declines following an initially strong market debut.
Since its launch on September 25, XPL experienced a significant surge, doubling from an opening price near $0.80 to reach a peak of $1.67 within days. This impressive rise rewarded early ICO investors with returns exceeding 3300% relative to their entry price, and pushed the token’s fully diluted valuation (FDV) to approximately $17 billion.
However, this momentum has not been sustained. Over the subsequent week, XPL’s value has nearly halved, currently trading around $0.87, which represents a drop of roughly 47% from its all-time high. This retreat contrasts with broader market movements, where Bitcoin appreciated by nearly 12% during the same period from September 27 to October 4. XPL’s decline marks a significant underperformance relative to major cryptocurrencies.
There has been no clear, singular event publicly identified to explain the token’s price downturn. Plasma’s team directed inquiries to founder Paul Faecks’ statements on social media, where he denied any involvement in token sales by the team or participation from the market-making firm Wintermute, addressing circulating concerns about market manipulation.
Potential contributing factors to the price drop include the ongoing liquidity incentive emissions, which release over $1 million worth of XPL tokens daily. Furthermore, large holders from the ICO phase—permitted to buy up to 10% of the initial $500 million token cap—may be offloading substantial amounts into the market. The initial ICO phase rapidly filled the $500 million cap, prompting the team to raise it to $1 billion, allowing individual investors to acquire significant quantities of tokens that became fully unlocked upon the token generation event.
Despite the price challenges faced by XPL, the Plasma network’s ecosystem appears to maintain robust on-chain activity and growth. It currently ranks as the sixth-largest decentralized finance (DeFi) platform, with total value locked (TVL) reaching $6.4 billion. A large portion of this TVL stems from its Aave vaults, which alone account for $4.5 billion or about 70% of Plasma’s DeFi holdings.
These lending vaults are offering users a yield exceeding 8% annual percentage yield (APY) today, although rates were substantially higher around launch—peaking at 50% during the token generation event and then adjusting to about 20% shortly thereafter. Yield rewards are distributed through partnerships with Plasma, Aave, and Veda protocols.
While XPL’s token price has struggled to maintain its initial highs, the underlying platform’s expanding user base and locked assets suggest continued interest and development within Plasma’s stablecoin-centric ecosystem.
