Plasma loses 85 percent in six weeks. What went wrong with XPL and why did the network collapse after an explosive start

Plasma burst into the industry as one of the loudest releases of 2025. The new Layer-1 blockchain, created specifically for stablecoin payments, received support from big names — Peter Thiel, Tether, and Bitfinex.

The launch at the end of September seemed perfect: in just two weeks, the network gathered over $6.3 billion in stablecoins and reached a TVL of $8.4 billion. The native XPL token rose above $1.50.

Today, the picture is the opposite. By November 23, 2025, XPL had dropped to $0.20, losing 85 percent of its value. Stablecoins on the network shrank from $6.3 billion to $1.78 billion, and TVL fell to $2.7 billion. The project, which was supposed to become the “financial L1 for stablecoins,” is now fighting for survival.

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Early Plasma growth was an illusion — it was driven only by farming

The rapid inflow of liquidity was ensured by aggressive yield farming programs. About 65 percent of all stablecoins in Plasma were placed in lending protocols for XPL rewards.

But as soon as the XPL price started to fall:

yields dropped in dollar terms
users began withdrawing stablecoins
liquidity started flowing to other networks

The outflow has not stopped to this day. Farming provided initial growth, but could not sustain long-term demand. As soon as the token stopped acting as an incentive, users left.

Token supply pressures the market every week

The situation is worsened by the XPL emission schedule. Regular unlocks for early investors and the team create:

constant increase in supply
minimal demand
additional pressure on the price

Next week, the largest unlock is expected: $18.13 million in XPL will hit the market and may trigger a new round of selling. The market is already preparing for another wave of pressure, and investors are reducing their positions.

Network activity is growing, but not where it needs to

The daily number of transactions in Plasma remains at high levels. However, the structure of these operations raises questions:

most stablecoins remain in lending pools
real payments and transfers are minimal
the network is still not being used as the payment system it was created for

Without real use and sustainable demand for stablecoin functions, Plasma risks remaining just a chain for temporary liquidity — and nothing more.

Where a rebound might occur

Some analysts believe that a short squeeze may form around $0.224–0.23.
The reason is simple:

If the price tests these levels and rises above, some shorts will be forced to close, which could give XPL a short-term boost upward.

But such a scenario would only be a technical rebound, not a trend reversal.

Why Plasma collapsed — briefly and to the point

Plasma attracted huge capital too quickly, but the main driver was farming.
As soon as XPL started to fall, the incentive disappeared.
Constant unlocks pressure the price.
The network still hasn’t received real payment use cases.
Stablecoins keep leaving, liquidity keeps shrinking.

To reverse the trend, Plasma needs not marketing, but real usage: integrations, trading services, payment partners, tools for merchants. Until this happens, trust will not be restored.

What’s next?

Plasma remains a network with strong support from major players, but the success of the first month turned out to be temporary. The project needs to transition from a “farming economy” to a “payment economy.”

If developers do not create real use cases, XPL risks repeating the path of dozens of L1 networks that exploded at launch — and disappeared after a few months.

Read more: Bitcoin recovers to $87,000 after the worst week of the year