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Imagine a financial system where transaction fees change every time you make a payment. One day, you pay a fixed cost, and the next, the fee suddenly jumps. For big financial companies handling millions of dollars, this unpredictability is a serious problem.
Now consider Ethereum and other blockchains. They require users to pay gas fees with their cryptocurrency, such as ETH. What’s the problem? Crypto prices continue to fluctuate, making costs unpredictable, especially for large financial companies.
To address this issue, Ethena Labs and Securitize have unveiled a new blockchain, Converge. Working with Ethereum, it will charge transaction fees using stablecoins rather than native crypto assets.
Centered on USDe & USDtb and secured by ENA, the new chain aims to become the “first purpose-built settlement layer where TradFi will merge with DeFi,” Ethena claimed on 18 January.
“Compliant access to on-chain financial markets” will be made easier with Converge, Securitize said in a separate statement.
Users will be able to pay gas fees with USDe and USDtb, the dollar-pegged stablecoins from Ethena Labs. The new chain is set to launch in the second quarter of this year.
Why Stablecoin Fees Are Relevant for Big Investors
The idea of using stablecoins for gas fees and payments has been thought of before, though.
Stablecoins have been used as gas tokens by Lens Chain (using Aave’s GHO) and Hela Chain (using its own HLUSD). However, Converge is the first to scale this model for institutional finance.
Decentralized finance and tokenized assets are also becoming more popular among institutions, which is another reason for this initiative. However, some players are still hesitant to use systems with fee structures that change often.
Along with an open DeFi ecosystem, the new blockchain will have three layers: regulated applications for Know Your Customer (KYC) interactions, new financial products based on Securitize’s tokenized securities, and unrestricted decentralized applications.
Securitize is issuing $2 billion worth of tokenized products, such as BlackRock’s BUIDL fund, which just reached $1 billion in assets under management. Converge will be the service layer for these products.
Validators who stake Ethena’s ENA token will protect Converge’s network while keeping transaction costs in dollars.
Pendle CEO Tsun Ngai Lee told Decrypt that the chain wants to “onboard institutional flows to DeFi” and that “various asset classes” will be tokenized through Securitize.
A Growing List of Supporters for Converge
With Aave Labs’ Horizon, Morpho Labs, Maple Finance, and EtherealDEX signing on alongside Pendle, five main DeFi protocols have thus far committed to building on Converge.
Asset management services will be offered by Anchorage, Copper, Fireblocks, Komainu, and Zodia, providers of institutional custody.
Through Layer Zero and Wormhole, Converge will also be interoperable with Oracle support coming from RedStone and Pyth.
Converge is an innovative blockchain that removes the biggest problem for institutions in crypto—unpredictable fees. Using stablecoins for transaction fees makes blockchain technology more friendly for big banks and investors.
With major support from DeFi projects and Wall Street, the initiative could be the first step in making crypto and traditional finance work together smoothly. If successful, Converge could attract more institutional players to DeFi.
