Ethereum co-founder hits out at economics of fast-growing Solana blockchain
Joseph Lubin says rival must ‘figure out a more sustainable business model for the network’
Ethereum’s co-founder Joseph Lubin has questioned the sustainability of rival projects, including the fast-growing Solana blockchain, as venture capital pours into a raft of new cryptocurrency networks.
The Ethereum blockchain has become one of the world’s most widely used digital ledgers, but it is facing challenges from rivals such as Solana, which has set lower transaction fees to draw in users.
Lubin told the Financial Times that Solana, which pitches itself as a faster and cheaper alternative to Ethereum, was paying outsized rewards to users who validate transactions on the network compared to the revenues generated by those transactions.
Solana needs to “figure out a more sustainable business model for the network”, Lubin said.
“That’s natural,” he said. “All the projects in our ecosystem essentially fake it until they make it, or they die.”
The fast-growing blockchain project has faced doubts before. Some critics have argued that Solana sacrifices security for greater efficiency, and the network has experienced multiple significant outages.
In response to Lubin’s criticism, Solana said that “simply looking at protocol revenue doesn’t tell the full story of the long-term performance” of a blockchain’s economic model.
Lubin’s comments came as tech investors make big wagers on new projects trying to create more efficient alternatives to Ethereum — including Avalanche, Near Protocol and Solana — in a race to capitalise on growing mainstream interest in cryptocurrency applications.
ConsenSys, a cryptocurrency software company led by Lubin and closely tied to Ethereum, said on Tuesday it had more than doubled its valuation to $7bn in a new $450mn round of financing. The company has soared in value as an influx of new users turned to its products to navigate Ethereum.
Ethereum is the most widely used digital ledger for rapidly expanding areas such as decentralised finance and non-fungible tokens. Lubin has become one of the project’s loudest advocates on Wall Street after playing a hand in the network’s development.
MetaMask, an app developed by ConsenSys with more than 30mn monthly active users, has recorded almost $330mn in transaction fees since late 2020 through a feature that lets users swap between cryptocurrency tokens on Ethereum, according to public data.
Venture capitalists invested the new money in ConsenSys Software, an entity Lubin created with the help of JPMorgan during a restructuring that was finalised in 2021.
It comes after almost three dozen former employees of its Swiss-incorporated predecessor company, ConsenSys AG, recently challenged the legality of the restructuring and requested a special audit. The employees have alleged the deal undervalued the intellectual property behind MetaMask and other key products transferred to the new entity.
Lubin said ConsenSys had been “extremely open” about negotiating with the former employees and “understanding their concerns”, and the company’s products were effectively “pre-monetisation” at the time of the transaction.
“It’s a very different world in our ecosystem as we’re crossing the chasm into mainstream adoption than it was during the darkest moments of Covid,” Lubin said.
ParaFi Capital, a cryptocurrency venture firm backed by KKR, led the new round of funding in ConsenSys. Microsoft, Singapore’s Temasek and SoftBank’s second Vision Fund also invested.
ConsenSys declined to comment on whether Lubin or other shareholders sold any shares in the financing.
Germany’s biggest power supplier warns against axing Russian imports
RWE says ‘immediate’ halt to energy supplies would hurt households and damage industry
Germany’s biggest power supplier RWE has warned against halting Russian energy imports to put pressure on Moscow, saying it would hurt German households and lead to lasting damage for industry in Europe’s largest economy.
“I understand very well the calls to extend the sanctions to the maximum. After all, the aim is to support Ukraine by weakening Russia’s leadership to the greatest degree possible,” said Markus Krebber, chief executive of RWE.
“However, we must unfortunately also acknowledge that there is a strong dependence on Russia, especially in energy supply, in Europe and in particular in Germany.”
He added that “an immediate stop would have unimaginable consequences for the heating supply of households”, while “a prolonged supply interruption would probably cause lasting damage to the production facilities of industry and small and medium-sized enterprises”.
Germany relies on Russia for more than half its natural gas, and Chancellor Olaf Scholz has pledged to diversify the country’s supply in the wake of the invasion of Ukraine. Although gas flows from Russia are continuing at normal levels, Moscow has threatened to cut supplies to Europe as a response to sanctions imposed on the country because of the invasion.
RWE said it supported the German government’s efforts to reduce dependence on Russian oil and gas and could revive as much as 3.5GW of coal-power capacity if requested.
It said British coal plants, however, could not be resurrected as they were already being demolished. Kreber added that RWE was in “constant dialogue” with the UK government, where there was “an ongoing discussion” to accelerate renewables, particularly wind farms where the “focus should be on offshore”.
Germany’s three nuclear power stations — one of which is run by RWE — are due to close by the end of this year but Berlin has ruled out extending their lifespan to help cut the country’s reliance on Russian gas.
Scholz has pledged to accelerate the construction of liquid natural gas terminals, which would make the country less dependent on supplies from Russia.
RWE said a memorandum of understanding for such a project in Brunsbüttel, north of Hamburg, was signed “just a few days ago” and that the company was “working flat out to be able to start operations as soon as possible”.
Some of Europe’s biggest energy companies, including oil supermajors Shell and BP, have announced plans to exit their business interests in Russia, although completely disconnecting from energy deals may take some time.
Both RWE and domestic rival Uniper SE have said they will not sign new long-term contracts with Russia but will continue to receive fuel under existing deals.
RWE said it would end all non-energy business with Russian companies with immediate effect.
Krebber said that “even though security of supply is the centre of attention at the moment, the medium- and long-term vision for energy policy remains unchanged”, insisting: “Expanding renewables and ramping up the hydrogen economy are more important than ever.”
Activist investor Enkraft Capital, which built a small stake in RWE last year, accused the company of being insufficiently ambitious in its decarbonisation plans, however.
“[War] seems to be yet another reason for RWE to wait for the government to take action rather than implementing a compelling forward-looking strategy that would benefit the company and Germany,” said Benedikt Kormaier, managing director at Enkraft.
EU and UK hit Roman Abramovich and other oligarchs with new sanctions
More names added to asset freeze and travel ban list, including Chelsea FC owner
The EU has added names including Chelsea Football Club owner Roman Abramovich to an asset freeze and travel ban list, in an attempt to increase the pressure on Russia for its invasion of Ukraine.
Alfa Group shareholders German Khan and Alexey Kuzmichev are among the individuals placed under sanctions, according to draft legal texts seen by the Financial Times.
Tigran Khudaverdyan, executive director of Yandex, one of Russia’s leading tech companies, is also blacklisted for being one of the businesspeople with close ties to Russian president Vladimir Putin.
The economic measures include a ban on transactions with state-owned Russian companies, except in the oil and gas sector, and certain raw materials such as aluminium, copper and palladium, according to diplomats briefed on the discussions.
An EU import ban on steel products worth €3.3bn, as well as an EU export ban for luxury goods to Russia, including luxury cars and jewellery, had also been adopted by the bloc, said the European Commission.
European companies will be banned from making new investments in the Russian energy sector, except for civil nuclear energy and the transport of certain energy products to the EU.
European credit rating agencies would also be banned from rating Russian companies and the country’s sovereign debt, the commission said.
“These sanctions will further contribute to ramping up economic pressure on the Kremlin and cripple its ability to finance its invasion of Ukraine,” the commission said, adding that the restrictions had been co-ordinated with allies, notably the US.
German finance minister Christian Lindner said the bloc was working on closing any loopholes for oligarchs to circumvent the sanctions regime. “No one who supports Putin is untouchable,” he told reporters in Brussels.
The new sanctions are to be published in the EU’s official journal later on Tuesday.
The move comes as the UK government announced an additional set of sanctions on more than 370 oligarchs and politicians linked to Putin’s regime, including Mikhail Fridman, co-founder of Alfa-Bank, and Mikhail Mishustin, prime minister of Russia.
Other individuals targeted include Dmitry Peskov, Putin’s press secretary, and Alexander Ponomarenko, the chair of Sheremetyevo airport who has a fortune estimated to be worth £2.22bn.
The legislation gives the government powers to designate individuals and entities under an “urgent procedure”, allowing the UK government to quickly align its sanctions package with other nations.
All individuals named by the UK government have already been placed under sanctions by allies such as the EU, Canada and the US. The UK’s Foreign, Commonwealth and Development Office said the sanctions were made possible in part due to the economic crime bill, which was fast-tracked through the House of Commons earlier this week.
“We are going further and faster than ever in hitting those closest to Putin — from major oligarchs, to his prime minister and the propagandists who peddle his lies and disinformation,” UK foreign secretary Liz Truss said in a statement.
What Japanese car auctions are signalling on the global economy
Sales of used vehicles for foreign markets reveal the impact of the Ukraine war and rising commodity prices
Between sessions, the cafeteria of the Mirive auction house emits a low roar of dealer chatter. In the air, and in many languages, is talk of commodity chaos, shipping rates, semiconductor supply chains, Chinese industrial strategy, the soaring price of a professional car wash and, since the invasion of Ukraine, war.
The auction’s setting, in the depths of the Saitama countryside, is rural; the economics in play as thousands of vehicles change hands over a few hours, could not be more global.
In the minutely balanced — and historically lucrative — business of shipping second-hand Japanese cars to emerging markets, “every single factor has an impact”, explains one buyer with customers across sub-Saharan Africa.
Tiny shifts in the mood and pricing of the auctions like Mirive in the suburbs of Tokyo and Osaka trace economic trends in Lesotho, Jamaica and the UAE, along with dozens of other markets that have, over decades, grown used to a constant flow of high-quality, good condition Japanese cars. Japan’s used car exports, said Sanshiro Fukao, a senior research fellow at the Itochu Research Institute, should be seen as the thermometer of the world economy.
Since late February, the abrupt slowdown of shipments to Russia and, with that, the evaporation of the single biggest source of demand for used Japanese cars has caused everyone to rip up the old calculations.
The critical figure that looms over Japan’s second-hand car market is the monthly average price settled at the country’s largest manager of auctions, Used car System Solutions (USS). For the first time since comparable records began more than 20 years ago, the average price in February edged over the Y1m mark ($8,500) — a milestone that still seemed remote a year ago when the average was 20 per cent lower. But for how long will it hold?
Locked into the Y1mn figure, say dealers, is not only the post-Covid/pre-Ukraine strength of worldwide demand in February, but the closely entwined relationship between the new and second-hand markets in Japan. These markets matter intensely to Toyota, Nissan and the other Japanese carmakers. Historically, when the second-hand auction prices rise, dealerships are more able to entice Japanese customers with higher trade-in prices and consequently push more new cars off the forecourts.
In common with other developed markets, the pandemic-related shortages of semiconductors have simultaneously squeezed the supply of new Japanese cars, extending waiting times and causing more domestic buyers to turn to the second-hand market. This, combined with a phase of multiyear weakness in the yen which buoyed global demand for used Japanese cars, produced the surge towards the Y1mn average.
For many years, a central pillar of Japan’s used car export market has been Russia. But the main port of entry, Vladivostok, has been changing. As the pandemic hit multiple supply chains, priority was given to arrivals from China and South Korean container ships with cargoes deemed to be of greater importance to the overall Russian economy. At the same time, Chinese carmakers have been attempting to reserve ever greater dockside space to push their new vehicles into the Russian market.
Yet even with these headwinds, said Fukao, of the total 1.2mn used Japanese cars exported last year, 160,000 went to Russia. The UAE, whose total includes a large proportion subsequently shipped on to Africa, was second with 130,000. But, as many of the dealers at Mirive auction confirmed, the day after Russia invaded Ukraine, essentially all shipments to Russia appear to have been suspended as insurance premiums surged and several key cargo routes were abruptly changed.
Auction traders say the sudden absence of Russian demand should be dragging the average off its Y1mn peak in relatively quick order. Even a further drop in the yen and expectations of greater demand from New Zealand and south-east Asia are unlikely to fully offset the drop.
But that reckons without the Russia-related factors affecting prices in Japan’s new car market: rising electricity and commodity costs that acutely affect carmakers and parts-makers, or their sudden need to find alternative sources of materials such as aluminium that would normally come from Russia. The spectacle of rising prices of new cars, said dealers, could easily prolong the phase in which Japanese buyers were attracted to used models.
“It’s always Russia — its either in or out of the calculation. Or both,” said one Pakistani trader, betting that, on balance, the Y1mn average will hold.
TikTok Becomes Cannes Film Festival’s Official Partner
TikTok has become the official partner of the Cannes Film Festival on time for its 75th anniversary and will give the cultural event a wider-than-ever platform comprising one billion users around the world.
While it banned selfies on the red carpet several years ago, Cannes is looking to draw global eyeballs and will provide TikTok users with some exclusive content from backstage, glamorous red carpet scenes and interviews with talents.
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Aiming to position itself as a top entertainment destination and content creator, the banner is also launching the #TikTokShortFilm, a global in-app competition of vertical short films – between 30 secondes and 3 minutes. The jury of the first edition #TikTokShortFilm will be presided by well-known director whose name will be announced at a later stage. Three awards will be handed out during the festival at an event which Cannes’ chief Thierry Fremaux will attend.
Cannes and TikTok’s alliance may seem unlikely but actually makes sense as both strive to support creators and shine an international spotlight on emerging talents.
Rich Waterworth, the general manager of TikTok in Europe, described the Cannes Film Festival as an “iconic moment that has forever changed the landscape of global cinema.”
“We are truly honored to welcome them as an official partner. Entertainment fans from all over the world turn to TikTok to be entertained, express themselves or discover something new, but they share an authentic and rewarding sense of community unlike anywhere else,” said Waterworth.
The executive said TikTok will “look forward to opening up more creative possibilities for our community as they get ready to be inspired, moved and entertained, bound by a shared love of video and cinema.”
Commenting on the partnership, Fremaux said he was also curious and eager for TikTok to “share the magic of the Festival with a wider, much more global and just as much cinephile audience than ever before.”
Fremaux pointed out that Cannes “has been connecting with the next generation of film enthusiasts by offering them the opportunity to experience the Festival through (its) ‘3 Days in Cannes’ program” since 2018. The initiative selects nearly 2,000 people between the ages of 18 to 28 to travel from around the world and attend the festival.
“With this collaboration (with TikTok) – which is part of a desire to diversify the audience – we’re looking forward to sharing the most exciting and inspiring moments from the Festival and seeing the Festival reimagined through the lens of TikTok creators and its community,” added Fremaux.
Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales
Talks between Riyadh and Beijing have accelerated as the Saudi unhappiness grows with Washington
Saudi Arabia is in active talks with Beijing to price its some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.
The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said.
The Saudis are angry over the U.S.’s lack of support for their intervention in the Yemen civil war, and over the Biden administration’s attempt to strike a deal with Iran over its nuclear program. Saudi officials have said they were shocked by the precipitous U.S. withdrawal from Afghanistan last year.
China buys more than 25% of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of China’s currency.