Become a Smarter DeFi investor in just 7 minutes per week

The DeFi Edge shares the best DeFi strategies, insights, & analysis so you can be early to the next opportunities.

By Edgy - September 30, 2025

Plasma: The Stablecoin Chain

A new chain has taken all the attention & liquidity.

Enter Plasma. It’s a new L1 chain focused on stablecoins.

The tech is good enough.

It has 1k TPS, with plans to scale to 10k TPS. For contrast, ETH still only does 20 txn/s.
Full EVM compatibility. So the app devs can use existing code & tools on Plasma as well.
Even though only Plasma runs validators right now, they’ll decentralize progressively.

The token was even better.

$XPL is the native token of Plasma. Just like other L1s, it’s used for gas and staking in Plasma.

But the best use of a token is to create a loyal community by making them rich.

Back in July, Plasma had done a presale. Anyone could’ve bought it if you jumped through some hoops. It was sold at $0.05/$XPL. The ATH on the 28th was $1.68. That’s >32x return.

Why is it a big hit?

Firstly, the launch was perfect. There were a ton of DeFi integrations. Many blue-chip protocols like Aave were live on day one. They also attracted capital even before launch through an incentive program.

Within a week of launch, it already has ~5.5B in Total Value Locked. It has already overtaken Base in TVL.

Secondly, it’s positioning as a stablecoin chain.

Stablecoins are the most successful crypto product.

There’s already ~$300B in onchain stablecoins.
Every other company is issuing its stablecoins. Circle had a crazy IPO. Tether is valuing itself at $500B. And more.
In 2024, stablecoins processed $27.6 trillion in onchain volume. That’s more than the combined volume of Visa and Mastercard that year.

$XPL is positioning itself as an onchain play to get exposure to that potential. How?

#1. Tether’s backing.

Tether is the largest stablecoin issuer. >58% of stables are USDT. Tether is a major investor in Plasma and has explicit support. So many people are viewing it as Tether play as well.

But the thesis is not 100% clear in this case. Tether has invested in a competitor chain called Stable. Plus, Tether’s value goes to its equity only.

#2. Free USDT Transfers

Simple USDT send and receive transactions will be free on Pulse.

A lot of stablecoin volume happens on Tron. It’s because high-frequency participants such as market makers, CEX off-ramps, PSPs, and remittance operators are very sensitive to transfer costs.

With free transactions, Pulse will attract that volume and liquidity to the Plasma chain.

#3. Plasma One, the stablecoin-native finance app

This app will allow users to save in dollars, earn yield on it, and make payments.

It also has a card that you can swipe at merchants. It’s one of the best crypto cards: it’ll target a 10% yield on base balance, 4% cash back, etc.

While the USDT transfers will be free, this app will have opportunities to capture value. For example, moving between USDT, local currencies, and other stablecoins creates natural spreads that it can capture.

Now, Plasma is not the holy grail. It does have a couple of challenges.

#1. Competitors

There are a ton of competitors.

Arc from Circle, the issuer of USDC
Stable is another L1 backed by Tether.
Tempo from Stripe, the internet payments giant.
Codex is an ETH L2-focused on stablecoins.

None of them is live now. But when they launch with their incentives and fanfare, it’ll be hard for Plasma.

Even the traditional chains like Solana and Ethereum are competitors. I’m not sure “stablecoin chain” niche is distinct from the “general purpose chains” niche yet.

#2. Privacy

If people want to use crypto in daily life, the transactions should be completely private.

Plasma does promise confidential transactions in the future. But they won’t hide the sender and receiver. Against competitors like Payy, which offers full compliant privacy, it won’t be enough.

That doesn’t mean Plasma is done.

In the short term, there’s still gas left.

$ASTER is a perp project that we covered last week. Its MC right now is $3B. Comparatively, $XPL is only $2B in MC.

The ecosystem is also booming. There could be a lot of opportunities, from memecoins to yield farms, for those who look.

You can see the Plasma yield farming opportunities here. Below are the top farms that I’m looking at.

Deposit to Plasma Lending vault & earn >8%
Supply USDT0 to the Fluid & earn >10% in APR
Provide liquidity to the USDT0/USDe Curve Pool & earn >13%.

Opportunities follow liquidity. And Plasma is attracting all the liquidity right now.

Sponsored by Lit Protocol

Lit Protocol: The Key to Unlocking Autonomy

AI is taking over everything.

It already writes code, generates content, and assists with decision-making.

AI Agents will be handling our crypto as well. They should be able to participate in web3 on our behalf. Imagine a world where your AI agent can trade assets, earn yield on your savings, or interact with dapps for you.

But there are a couple of problems:

Devs cannot securely delegate our keys (aka, wallets) to agents. AI might run amok with it.
AI agents might need access to sensitive information and credentials. Information that we don’t want to be public.

So how do you let AI agents operate in Web3… safely?

Enter Lit Protocol. It’s a decentralized key management and private compute network for signing and encryption, the two fundamental technologies that underpin the majority of our digital interactions.

Technically, Lit is a decentralized set of nodes that runs Trusted Execution Environments.It enables developers to generate signatures / manage accounts / manage data access in a decentralized way instead of forcing them to trust a centralized provider (i.e., AWS KMS).

In our example, it allows users to delegate operations to an AI agent to perform on their behalf without worrying that the agent might run away with their funds.

Here’s a breakdown of the 3 core “services” Lit provides:

Threshold cryptography (MPC/TSS). Instead of storing a key on one machine, Lit splits it across many independent nodes. No single node ever has the whole key. When a request comes in, nodes cooperate to produce a valid signature or decryption—but only if the request satisfies the policy.
Encrypted Virtual Machines (TEE). Every Lit node runs inside a TEE. They are special secure hardware that guarantees code executes exactly as written, and that data inside the machine remains encrypted from the outside world. This gives Lit nodes a verifiable execution layer: even node operators can’t tamper with or peek into the code and data running inside. It means policies, key shares, and computations remain confidential, auditable, and consistent across the network.
Programmable policies. Policies are code that define the rules: spend limits, time windows, multi-party approvals, compliance checks, expiration dates, or contextual signals like geographic location or AI agent recommendations. These rules govern both signing and decryption.

Does all of that sound like too much technobabble?

Here’s the English translation. When you’re building an app or an agent with Lit protocol, you can:

Create and manage programmable universal accounts that can operate across any chain, from Bitcoin and Ethereum to Solana and beyond.
Protect sensitive data by encrypting it, so only authorized parties can access it. (Unlike the default, where onchain means public.)
Enable machine-to-machine trust (Internet of Things is an example) by using Lit to sign messages, prove identity, and encrypt traffic.
Solve chain fragmentation with programmable, chain-agnostic signing to enable cross-chain interoperability and generalized message passing
And many more.

In other words, Lit is a core infrastructure that powers Web3.

And it’s not just theory. The numbers will speak for themselves.

$216M+ in trading volume processed
1.6M+ wallets created on Lit’s Datil mainnet beta
$340M+ total value managed (TVM) by the Lit network.

Some of the biggest products in our industry are powered by Lit, including Gitcoin, Lens Protocol, Emblem Vault, Humanity Protocol, Spheron Network, Genius Protocol, and more.

To see Lit’s potential in action, Vincent is a great example.

It’s an open-source framework secured by Lit Protocol that allows users to create AI Agents that operate crypto networks, traditional finance (TradFi), and e-commerce platforms. Its core unlock is enabling users to securely delegate operations to AI agents to perform on their behalf.

Vincent Yield is the flagship app released on top of the Vincent platform. It securely rotates your Base USDC into the highest-yielding vaults on Morpho every week.

Its current yield is ~40% APY and is in early access. (The APY includes future $LITKEY token rewards)

And it perfectly shows the powers of Lit Protocol / Vincent in action:

It leverages the ability to delegate operations to AI agents and other third parties safely.
Users set rules and restrictions (spending caps, time intervals, scope of actions), so agents can’t run wild.
Devs can utilize the Vincent platform to build their own onchain automations. Some examples are DCA, staking, trading strategies, and data-triggered actions.

This is what AI-powered crypto looks like when it’s done right.

The $LITKEY Token

Here’s the big news: Lit Protocol’s Token Generation Event is coming soon.

Most crypto tokens are useless “governance” tokens. They won’t accrue value from the success of the platform. (Looking at you, $UNI).

$LITKEY will accrue value from Lit Protocol. Here’s how:

Staking: Lit Protocol Node operators have to stake $LITKEY. They’ll be rewarded for it.
Payment: Applications will pay for Lit services using $LITKEY
Governance: $LITKEY holders have the ability to influence decision-making and the future direction of the protocol

$LITKEY is the economic backbone of the entire Lit ecosystem, every action driving value to the token.

And as you can see in the chart below, Lit activity is consistently increasing.

Value of those activities will be captured by $LITKEY.

This isn’t some shady token launch where you’re just the exit liquidity. $LITKEY is from doxxed founders with serious experience:

And it’s backed by some of the most successful and trusted investors in the space, from VCs like 6th Man Ventures and angels like Aave founder Stani and Solana co-founder Raj Gokal.

All of them recognize the Lit opportunity. $LITKEY isn’t just another token. It’s the token of the critical cryptographic layer trusted by some of the biggest names in the space.

Explore Lit Protocol →

🚀 DeFi Catalysts

YieldBasis deposits will be coming online soon. They’ve done presales to qualified investors on Legion. It’ll open to more people on October 1st.

Morpho released Morpho Vaults V2 on Ethereum. It’s a new open-source standard for asset curation.

Hyperliquid launched its Hypurr NFT collection. It already has a floor price of $64.2k and has generated >$45M in trade volume.

Pump.fun introduced Advanced for mobile. It introduces many new features, like Terminal columns and other pro trader tools.

Double Zero has received a No-Action Letter from the US SEC that says 2Z does not have to register as a class of “equity securities”.

Spark has partnered with PayPal to grow PYUSD supply by $1 billion using Spark’s stablecoin boostrapping toolkit.

Ethereum had ~$796M in net outflows last week. That was the largest outflow week. But it had a massive >$546M inflow yesterday.

Pear Protocol has expanded to Base. Users can now try out the beta version.

🚀 New Launches

Spiral Stake has opened up for deposits. It’s Leveraged Looping protocol for stablecoin yields powered by Morpho and Pendle.

Enso launched Checkout, which frames itself as the universal payment layer for Web3. It’ll allow users to accept crypto from anywhere.

Share came out of stealth. It combines social network, block explorer, and wallets into a single app.

📰 Industry News

SWIFT, the TradFi cross-border financial network, is partnering with Consensys for onchain experimentation on Ethereum L2 Linea.

European banks, including ING, UniCredit, Danske Bank, and CaixaBank, have formed a consortium to launch a MiCA-compliant Euro stablecoin.

ethOS opened up dGEN1 to everyone. It’s a mobile phone from the Ethereum ecosystem that provides crypto-related features.

🐦‍⬛ X Hits

Crypto IPO watchlist.
Prediction markets deep dive.
Crypto reward cards overview.
Explanation of verifiability by Sreeram
Architecture & positioning of top money markets.

😂 Meme

Until next time,

Edgy

BACK TO NEWSLETTERS

Other Newsletters You Might Like:

Learn How to Analyze Crypto Projects Independently

If you don’t learn to analyze projects independently, You’re other people’s exit liquidity.

Analysis Apprentice is a free, 7-day course designed to help you evaluate any project.

$54K for a cat pic? Hyperliquid says yes