PayPal’s Cryptocurrency Chief Says Ethereum Isn’t the Best Payment Solution — Here’s Why

Jose Fernandez da Ponte, Vice President of PayPal’s Blockchain, Cryptocurrency and Digital Foreign money (BCDC) Division, stated that Ethereum (ETH) isn’t one of the best cost resolution.

Ethereum falls brief relating to funds

Speaking On the Solana Breakpoint 2024 convention, Ponte drew consideration to Ethereum’s incapacity to deal with massive volumes of transactions, a key purpose why PayPal selected to launch its U.S. dollar-backed stablecoin PYUSD on rival good contract platform Solana (SOL).

PayPal first launched the PYUSD stablecoin on the Ethereum community in August 2023. Nonetheless, in Might 2024, the corporate launched a stablecoin on the Solana blockchain, which as a consequence of its processing of “Conduct massive volumes of transactions at excessive pace and at very low price.

Ponte defined {that a} totally purposeful cost community should be capable to course of no less than 1,000 transactions per second (tps), a quantity that the Ethereum community will battle to persistently obtain.

Ponte added that not solely transaction pace or community throughput but in addition token scaling advantages make Solana a pretty base layer for PayPal’s USD-backed stablecoin PYUSD. Ponte stated:

There are transaction confidentiality and transaction administration charges. So once we had been searching for the subsequent chain, Solana was a simple selection, particularly due to its token scaling capabilities.

For these unfamiliar, the Solana Token extension provides further performance to tokens, supporting options resembling switch limits and multi-signature approvals.

These enhancements are very helpful in cost methods as a result of they permit builders to implement custom-made cost processes, automate sure processes, and add a layer of safety to transactions. The token extension offers the choice to customise PYUSD to handle funds with particular situations or necessities.

Notably, two former senior Coinbase workers lately roll out Their cryptocurrency alternate TrueX will use PYUSD as its “most well-liked token for buying and selling.” As anticipated, PYUSD’s market capitalization has exceeded $730 million and should proceed to erode the market share of main stablecoins resembling USDT and USDC.

Can the ETH ecosystem develop into retail-friendly?

Given the context, Jose’s phrases are usually not stunning. For stablecoins to develop into mainstream, the underlying community must have robust throughput and inexpensive transaction charges. Though Ethereum’s Dencun upgrade It’s designed to considerably cut back the gasoline price of the community, but it surely pales compared to the bottom charges charged by networks resembling Solana and Tron.

There may be hope for the success of Ethereum layer 2 scaling options resembling Optimism and Arbitrum. There are at present 74 Ethereum second-layer initiatives in whole. show There may be robust demand for options that may assist Ethereum scale with inexpensive transaction charges.

Nonetheless, however, there are issues concerning the centralized nature of many layer 2 scaling options. a current report set Centralization dangers could enable community operators to achieve management of person funds. At press time, Ethereum was buying and selling at $2,540, up 4.2% previously 24 hours.