Share this article
Ethereum’s shift to Proof-of-Stake could kickstart mainstream adoption and increase payouts, say two senior analysts at JPMorgan in a recent report.
JPMorgan Backs Ethereum Staking
JPMorgan thinks the cryptocurrency staking sector is poised for growth, according to a recent report.
In the report, two analysts explain how Ethereum’s planned move to Proof-of-Stake will increase adoption as institutions and retail investors take advantage of the high yields generated by staking. Ethereum is scheduled to complete “the merge” from Proof-of-Work to Proof-of-Stake after shipping its EIP-1559 update.
Staking across all cryptocurrencies generates an estimated $9 billion annually. The report predicts that this figure could increase to $20 billion following Ethereum’s move to Proof-of-Stake. A final prediction in the report puts total staking rewards at $40 billion by 2025.
Proof-of-Stake is a method of securing a network; users can stake their tokens to help validate transactions and maintain consensus on the blockchain. In return, those staking their tokens receive rewards.
According to JPMorgan, staking yields could be a key consideration for institutional investors. The report states:
“Not only does staking lower the opportunity cost of holding cryptocurrencies versus other asset classes, but in many cases cryptocurrencies pay a significant nominal and real yield.”
Additionally, the report states that declining volatility and a drop in power consumption will be important factors leading to mainstream adoption. JPMorgan has been showing clear interest in crypto over the last few months, recently recommending a 1% Bitcoin allocation in portfolios and indicating that it plans to offer crypto-related products to clients.
Ethereum 2.0, a set of updates that will see the network adopt Proof-of-Stake, has been anticipated for years. After numerous setbacks, it’s expected to ship in late 2021 or early 2022.
There’s currently over $12 billion locked up in the Ethereum 2.0 staking deposit contract, generating an APR of approximately 6.4%. However, ETH staked on the network cannot be withdrawn until the Ethereum 2.0 update goes live, making some people reluctant to stake their assets.
Disclosure: At the time of writing, the author of this feature owned BTC and ETH.
JPMorgan May Launch a Bitcoin Fund This Summer
JPMorgan is allegedly creating a Bitcoin fund to allow its high-net-worth clients to trade the leading digital asset. JPMorgan Joins the Bitcoin Craze For the past 18 months, finance’s favorite…
Bitcoin Could Crash Further, Says JPMorgan
May 2021 was Bitcoin’s worst-performing month since 2011, but an analyst from American bank JPMorgan believes the asset could trend lower in the medium term. JPMorgan Turns Bearish JPMorgan strategist…
What is Polygon (MATIC): Ethereum’s Internet of Blockchains
In terms of both decentralized app (DApp) development and adoption, no blockchain has been more successful than Ethereum (ETH). But despite its relative success, the Ethereum network still contains several…