Ethereum is facing a fee steam

Hello reader, from a reasonably sultry London, while the holidays are approaching the anniversary of the queen and the pennant chains dissolve.

In this week, Ethan Wu gives his fintechft debut and writes about Ethereum and his efforts to reduce costs, I speak to Oded Zehavi from Mesh Payments, and Joshua Oliver and Miles Kruppa immerse yourself in the role of the crypto exchanges as a gatekeeper.

contact thoughts, comments and suggestions as always to Imani (Imani.moise@ft.com) or me (sid.v@ft.com). Happy reading!

Ethereum is prepared for a fee steam

Ethereum looked like the champion of crypto for a long time when it comes to interfering in FinTech. Since 2015, when the blockchain introduced "intelligent contracts"-code bits that enable the parties to complete business, then carry out the computers and which form the basis for decentralized financial applications-it is the most busy blockchain platform.

But in its popularity, Ethereum has become overloaded, which has led to increasing “gas fees” - the costs of carrying out a transaction on the blockchain. When non -funny tokens exploded in the mainstream in 2021, the gas fees rose to the hundreds of dollars per transaction. It is a weak point to which newer competitors with lower fees like Solana like to plunge.

Ethereum has a plan to ward off the competition. First, the blockchain wants to redesign it in such a way that it runs on a "Proof of Stake" protocol that could significantly reduce energy consumption in response to long-term environmental complaints in relation to cryptocurrencies.

Secondly, it wants to start with the "Sharding" or divide the Ethereum network into bite-sized pieces, which would accelerate the processing and reduce the fees that the users pay.

These changes should produce a nimble "Ethereum 2.0", which is intended to serve as a basic layer for a much -praised decentralized internet.

But these technical upgrades were repeatedly delayed. "I am absolutely convinced of this: In 2020, Ethereum 2.0's delivery year," a top developer praised in 2019. But the project has dragged on for so long that the Ethereum 2.0 label had to be dropped. (It's called "Merge".)

Will it be different this time? Dispringingly, the last start date for the revised Ethereum, June 2022, was postponed again later this year. Tim Beilko, an Ethereum Foundation researcher, said in an interview on May 12 that the developers were really in the final phase of the debugging. The co -founder of Ethereum, Vitalik Buterin, said on Thursday at a conference that the merger would take place in August of this year, "if there are no problems".

Regardless of the repeated delays, Ethereum probably has time left. Sara Xi, Chief Product Officer at the FinTech company Prime Trust, said that the developer base of the blockchain, the largest in the crypto world, is sufficient to be one step ahead of the competition while the new protocol get its finishing time.

If Ethereum does not conduct the upgrade, the high fees mean that "someone else will eat their lunch," said Xi, adding that the probability of success is likely but not secured.

The effects of a successful upgrade can be far. Meta announced in the early this month that it builds up an NFT service via polygon, an Ethereum-based platform. The provision of Ethereum-based NFTS for Instagram and Facebook users could lead to a new increase in interest in the blockchain. But if $ 500 transaction fees-as they were observed during the NFT craze last year-are in the way of Meta to look somewhere else.

should go through the upgrade, How far the fees decrease is still open. The real test will come when the next wave of trade etheruses flooded - but the users may not wait until it is ready to fight. ( ethan wu )

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Quickfire questions and answers

I spoke to Oded Zehavi, CEO and co -founder of Mesh Payments based in New York, which provides companies and employees tools to persecute expenses and expenses. The company, which was founded in 2018, has raised $ 63 million to date with a financing round of $ 50 million under the direction of Tiger Global last December. In March, the company announced a partnership with Visa to start a program that links its virtual cards with an countless physical map.

How did the pandemy shape the business of mesh? Before pandemic, we used the infrastructure we have built up for completely different problems related to developing markets. We quickly found that the pandemic has really changed the way of thinking of our customers. One of the more critical challenges was how companies switch to full remote administration. Many things that could be solved before pandemic if everyone is in a central place were reinforced.

We have seen that the boundaries between countries are less and less relevant - we see that more and more companies understand the need to act more globally. This brings new challenges for financial teams at various levels. Many of our customers are quickly growing technology companies that add more and more skills. We also believe that things will not be like before pandemic, but we believe that we will continue to see new applications.

How does Fintech interlink with traditional actors? I see a market that is dominated by American Express and the old banks. Most companies still have to implement the next generation systems we provide. There is still so much business to win. But many of the companies saw the growth of these fintechs compared to what they were a few years ago - there is really something to investors.

What is Mesh's unique selling point? For us, we look at the problems of the corporate expenditure and try to think about what it should look like to offer a completely different approach. Many companies offer company cards, mostly made of plastic - we see it very differently. What we have announced is that you can take your plastic card and connect you to a virtual card so that you can pay offline in a way that offers more security. It is really about rethinking the way companies want to spend money and the level of security they expect for payment methods.