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Ethereum fees are skyrocketing — But traders have alternatives

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With the rapid growth of decentralized finance, upcoming scaling developments on Ethereum 2.0, and increased crypto allocation in the portfolios of institutions, the price of Ether (ETH) is rapidly ascending. In fact, we’ve already seen ETH break the $2,000 barrier for the first time, marking a brand-new all-time high. All this action may be bullish for ETH holders and DeFi investors, but for smaller DApp developers and other users on the network — such as traders using ERC-20-based stablecoins — it’s quickly pricing them out.

That’s because the cost of using any stablecoin depends on the blockchain network on which it functions. And, once again, the Ethereum blockchain is finding itself plagued with network congestion and rising fees. On Feb. 23, the average transaction fee on Ethereum soared past $39 for the first time, making transacting with ERC-20 tokens like the Ethereum-based versions of Tether (USDT) and USD Coin (USDC) expensive and even prohibitive.

While Eth2 with its transition to proof-of-stake may hold the answers in the long term, traders are currently left frustrated. The good news is that there are alternatives to allow them to avoid price volatility by holding their value in stablecoins — without paying hefty network fees.

Related: DeFi users shouldn’t wait idly for Eth2 to hit its stride

USDT and USDC on the Algorand blockchain

As a public and open-source smart contract blockchain using a PoS consensus algorithm, Algorand provides the scalability and speed that Ethereum is currently lacking. By running USDT and USDC on Algorand, users can transact in their preferred U.S. dollar-backed stablecoin at a fraction of the cost and time.

The technology behind the Algorand blockchain allows for high throughput, meaning more transactions can be processed per second than on other comparable blockchains, such as Ethereum. In fact, Algorand can process more than 1,000 transactions per second, compared to Ethereum’s TPS of fewer than 15.

This means that transactions on Algorand are settled almost instantly — in less than five seconds. And, rather than having to endure a hefty $39 average, fees can be as low as $0.001 per transaction — regardless of the transaction size.

Using the Algorand Standard Asset protocol for creating new tokens, developers can launch new ASA tokens to be used in a decentralized application — or use it as a way of transferring existing assets to a faster alternative blockchain.

With a market cap now comfortably above $35 billion, Tether’s USDT is the most popular stablecoin in existence and the third-largest cryptocurrency by market cap. USDT is currently issued on a number of blockchains, including Bitcoin (Omni protocol), Ethereum (ERC-20 protocol), Tron (TRC-20 protocol) and Algorand (ASA protocol).

Currently, if a trader wants to transfer 100 USDT (ERC-20), it would cost them approximately $3.43 in Ethereum network gas fees. The same transaction using ASA would be 100 times cheaper, making it extremely appealing, especially to high-frequency, high-volume traders.

The continued development of the crypto space

Ethereum, with the largest developer community in the crypto space and by far the highest number of DApps running on it, understands this better than anyone. However, the arrival of Ethereum 2.0 could still be some time away. However, the arrival of Ethereum 2.0 could still be some time away, and we need alternatives to Ethereum and its rising gas fees and network congestion.

Algorand is a technically sound protocol that provides the scalability essential for further crypto adoption and the continued growth of the space. And it’s a major step in the right direction as cryptocurrency gets closer to mainstream adoption.

Healthy competition such as this incentivizes layer-one protocols like Ethereum to intensify the moats around their products and to solve issues related to their scalability, transaction costs and interoperability. And this can only be a good thing for all participants in the network.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Jay Hao is a tech veteran and seasoned industry leader. Prior to OKEx, he focused on blockchain-driven applications for live video streaming and mobile gaming. Before tapping into the blockchain industry, he had already had 21 years of solid experience in the semiconductor industry. He is also a recognized leader with successful experience in product management. As the CEO of OKEx and a firm believer in blockchain technology, Jay foresees that the technology will eliminate transaction barriers, elevate efficiency and eventually make a substantial impact on the global economy.

Ethereum fees are skyrocketing — But traders have alternatives

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Omni storage & rentals fails, shutters, sells engineers to Coinbase

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$35 million-funded Omni is packing up and shutting down after struggling to make the economics of equipment rentals and physical on-demand storage work out. It’s another victim of a venture capital-subsidized business offering a convenient service at an unsustainable price.

The startup fought for a second wind after selling off its physical storage operations to competitor Clutter in May. Then sources tell me it tried to build a whitelabel software platform for letting brick-and-mortar merchants rent stuff like drills or tents as well as sell them so Omni could get out of hands-on logistics. But now the whole company is folding, with Coinbase hiring roughly 10 of Omni’s engineers.

“They realized that the core business was just challenging as architected” a source close to Omni tells TechCrunch. “The service was really great for the consumer but when they looked at what it would take to scale, that would be difficult and expensive.” Another source says Omni’s peak headcount was around 70.

The news follows TechCrunch’s report in October that Omni had laid off operations teams members and was in talks to sell its engineering team to Coinbase. Omni had internally discussed informing its retail rental partners ahead of time that it would be shutting down. Meanwhile, it frantically worked to stop team members from contacting the press about the startup’s internal troubles.

$35M-funded Omni rentals in acqui-hire talks with Coinbase

“We’ll be winding down operations at Omni and closing the platform by the end of this year. We are proud of what we built and incredibl y thankful for everyone who supported our vision over the past five and a half years” an Omni spokesperson says. Omni CEO Tom McLeod did not respond to multiple requests for comment. Oddly, Omni was still allowing renters to pay for items as of this morning, though it’s already shut down its blog and hasn’t made a public announcement about its shut down.

“Coinbase has reached an agreement with Omni to hire members of its engineering team. We’re always looking for top-tier engineering talent and look forward to welcoming these new team members to Coinbase” a Coinbase spokesperson tells us. The team was looking for more highly skilled engineers they could efficiently hire as a group, though it’s too early to say what they’ll be working on.

Omni originaly launched in 2015, offering to send a van to your house to pick up and index any of your possession, drive them to a nearby warehouse, store them, and bring them back to you whenever you needed for just a few dollars per month. It seemed too good to be true and ended up being just that.

Eventually Omni pivoted towards letting you rent out what you were storing so you and it could earn some extra cash in 2017. Sensing a better business model there, it sold its storage business to Softbank-funded Clutter and moved to helping retail stores run rental programs. But that simply required too big of a shift in behavior for merchants and users, while also relying on slim margins.

Omni

One major question is whether investors will get any cash back. Omni raised $25 million from cryptocurrency company Ripple in early 2018. Major investors include Flybridge, Highland, Allen & Company, and Founders Fund, plus a slew of angels.

The implosion of Omni comes as investors are re-examining business fundamentals of startups in the wake of Uber’s valuation getting cut in half in the public markets and the chaos at WeWork ahead of its planned IPO. VCs and their LPs want growth, but not at the cost of burning endless sums of money to subsidize prices just to lure customers to a platform.

It’s one thing if the value of the service is so high that people will stick with a startup as prices rise to sustainable levels, as many have with ride hailing. But for Omni, ballooning storage prices pissed off users as on-demand became less afforable than a traditional storage unit. Rentals were a hassle, especially considering users had to pick-up and return items themselves when they could just buy the items and get instant delivery from Amazon.

Startups that need a ton of cash for operations and marketing but don’t have a clear path to ultra-high lifetime value they can earn from customers may find their streams of capital running dry.

Read more: https://techcrunch.com/2019/11/25/omni-shuts-down/

$35M-funded Omni rentals in acqui-hire talks with Coinbase

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Physical storage-turned-rentals startup Omni is dealing with layoffs today, two sources familiar with the situation tell TechCrunch. Omni just shed seven operations team members. The startup is in talks to sell its engineering team to Coinbase after also receiving interest from Thumbtack.

Omni’s rental business was doing poorly without enough users paying a few bucks to borrow a tent, bike or power drill. Omni had planned to launch a white-labeled platform allowing brick-and-mortar merchants to operate and market their own rental business.

But despite having plenty of cash left after raising $25 million from cryptocurrency company Ripple early last year, Omni feared the new platform would flop too and its prospects would worsen.

The company is in talks with Coinbase to hire some of the engineering staff, who would have them work on Coinbase Earn, which rewards users with cryptocurrency for completing online educational programs. Some employees are interviewing at Coinbase today. However, a Coinbase spokesperson told me there’s currently no official deal — before noting that there is nothing on the record they can share. Omni promised TechCrunch a statement but then refused to talk on the record.

Omni

Omni got its start in on-demand storage, where it would come to your home, pick up and tag your stuff, store it in a warehouse and bring it back whenever you wanted it. It grew popular in San Francisco and started to scale out to other cities. In April, Omni began allowing users to earn money by renting out their stored goods to other Omni customers.

But by May, Omni was selling its storage business to SoftBank-funded competitor Clutter, and the transition was rocky. Users complained about changing prices and misplaced items, alarmed that suddenly a different startup had control of their possessions.

I was formerly a happy Omni customer of its storage business, but the transition to Clutter was botched and shook faith that users’ stuff would be taken care of. At one point they lost some of my belongings, until C-level executives stepped in to figure out what happened.

Going forward, instead of storing goods itself, Omni would rely on local storefronts for pickup and drop-off of rentals. But many users balked at the hassle of rentals when Amazon makes buying so easy.

One source said that Omni had discussed telling rental partners in two weeks that it would be shutting down the rental service, though TechCrunch cannot confirm that. Another source said Omni was frantically trying to stop members of its team from talking to the press today.

Omni’s vision of cloud storage for the physical world and access over ownership had attracted capital from Flybridge, Highland, Allen & Company, Founders Fund, Precursor and a wide array of angels. But efforts to change user behavior and operate a logistically complicated business, matched with spotty execution, led the startup to hit the skids and seek a soft landing.

Read more: https://techcrunch.com/2019/10/04/omni/

Clutter has picked up Omnis storage business; Omni to focus on rentals

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On the heels of Clutter announcing a large growth round of $200 million earlier this year, the storage startup is cleaning up the competitive field. TechCrunch has learned and confirmed that Clutter has purchased the storage business of erstwhile rival Omni.

Omni will remain an independent company, which will now instead focus on rentals of personal items. That business was originally built around renting out items that you had stored with Omni itself. In recent months, however, the company had been transitioning that model to one where you used local businesses as the hub for handing over or picking up rented items. (It’s also been dabbling in cryptocurrency, offering to pay users in XRP instead of cash for renting out items.)

The companies had been working on the acquisition for the past two months, and Ari Mir, CEO and co-founder of Clutter, told TechCrunch it closed today.

While we were writing this story, Omni also posted a short note announcing the deal. “This deal allows us to double down on our rentals business and focus 100 percent of our efforts on empowering everyone to access the items they need when they need them,” it notes.

Mir said the two are not discussing the financial terms of the acquisition, which will give Omni customers 90 days under their current plans before being offered alternatives from Clutter, or a free delivery of their items elsewhere.

That free delivery might be to a company that rents out those possessions — such as bikes or furniture — that owners are not currently using but still want to keep. That’s because unlike Omni, Clutter will not be offering those customers the option to rent out items through Clutter itself. It’s an area that Mir said the company does want to move into one day, but it’s focussing on expanding the storage business first.

Clutter was last valued at around $600 million in its most recent deal, with backers including Softbank, Sequoia, Atomico and GV.  Omni has raised around $33 million.

The acquisition and spinning out of the service underscores a wider shaking out of startups that had emerged over the last several years to disrupt the incumbent storage market.

Tapping into a changing tide of how we live today — smaller dwellings, and more movement especially for younger working people — many startups saw an opportunity to provide more flexible solutions to modern consumers built on the on-demand model.

For Clutter, Omni and a number of competitors, their target users are consumers based in urban areas who live in smaller spaces with less storage options; have the disposable income not only to buy stuff but to pay to keep it somewhere else; and likely already use of other app-based on-demand services for food, transport, work-space and so on, making them familiar and ready to work with startups offering the same services to manage their material possessions.

But as we have noted before, the business of storage on demand is nothing short of, well, cluttered.

The wide array of rivals include incumbents like Public Storage, U-Haul and other older businesses that offer services to clear away your possessions and/or store them in lockers. Newer startups still active in storage include MakeSpace, Livible, and Closetbox.

But there is now also a growing list of companies that have tried to build storage businesses, and have thrown in the towel. They include Trove (which was acquired by Nextdoor and has transferred its storage business to “trusted partners”), Handy (which was acquired by ANGI Home Services), and now Omni.

One of the reasons it’s been difficult to build startups in this space is because storage is a little bit like logistics: it requires scale for the economic and operational models to be more viable, and so if the business isn’t growing fast enough, it can be too hard to sustain it.

If some businesses haven’t been scaling fast enough, it seems that Clutter is emerging as a consolidator that has: in addition to buying Omni’s storage business, it had also acquired Handy’s storage business. (Mir described the two acquisitions as “very similar” in how they were structured.) Clutter had been offered Trove’s business as well, he added, but declined to take it.

“Our business has the capital and operational intensity of an Amazon,” Mir said. “We’re consumer-facing, but we also are building a big backend, complete with trucks and warehouses. It requires lots of capital and being good at operations. Not a lot of teams have the appetite for it. It’s incredibly challenging.”

The parallel with logistics is not one to be ignored. Like logistics, storage involves three key elements: the building of smart platforms to optimise the routing of goods, pricing of services and other features; the use of warehouses as start, middle and endpoints in the movement of goods, spaces where items can be both kept and moved; and a network of reliable people to operate the delivery and distribution aspects of the business.

From what we understand, the second of those — the physical storage spaces — is an area that Clutter will be looking to develop more in the coming months, with its next funding round likely to be structured to help it start to take on more property of its own to build out its operations.

Additional reporting Josh Constine

Read more: https://techcrunch.com/2019/05/17/clutter-has-picked-up-omnis-storage-business-omni-to-focus-on-rentals/