JPMorgan analysts being bullish on Ethereum and staking ecosystem
Jamie Dimon, JPMorgan CEO, argued in a report that blockchains running more energy-efficient networks than Bitcoin will increase in popularity.
The researchers predict that Ethereum’s shift to proof-of-stake (PoS) after ETH 2.0 launch next year is going to encourage the adoption of the alternative consensus mechanism and staking. This could result in staking pay-outs surging to $20 billion following the launch of ETH 2.0 and $40 billion by 2025, according to the report by Forbes.
Staking provides rewards to the token holders rather than mining firms which makes it more attractive to retail and institutional investors.
“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,” the report notes.
The report also states that as the volatility of cryptocurrencies declines, the ability to earn a positive real return will be an important factor in helping the crypto market become more mainstream.
The JPMorgan research suggests that the staking will bring in millions in revenue for exchanges and companies offering staking services and taking a cut. It predicts that staking presents a $200 million revenue opportunity for Coinbase in 2022, up from $10.4 million in 2020.
The research further stated that Staking and DeFi offer far better yields than the traditional banking system, where interest rates are rock bottom or even negative in some instances.
The authors also predicted that the ability to use crypto assets to earn yield via staking will make digital assets a more attractive asset class and could help to grow mainstream crypto adoption.
Ethereum was mentioned several times with its transition to full proof-of-stake (PoS) expected to occur sometime next year. At the time of writing, the ETH 2.0 Beacon Chain had amassed a little under 6 million ETH. This works out at just over 5% of the entire supply, worth around $12.3 billion at current prices.
It was yielding 6.4% per year, which is way beyond anything in any high street bank. Additionally, EIP-1559 which will launch this month will burn network fees, creating additional deflationary properties to the Ethereum network.