JPMorgan Estimates Ethereum Shanghai Upgrade Might Bring More Investors to Stake in the Protocol
JPMorgan, one of the biggest financial institutions in the world, estimates that the arrival of the next Ethereum upgrade, codenamed Shanghai, will bring more investors to stake their funds in the protocol. The firm believes that this number might reach 60% of the ether issued, a number already staked in other blockchain networks. JPMorgan Expects Ethereum Shanghai Upgrade to Bring More Funds to the Network
A recent report by JPMorgan has revealed that the upcoming Shanghai upgrade, slated to be applied in March, might bring more capital to the network. The investment bank estimates that Shanghai will bring Ethereum’s stake percentage to the number of other popular proof of stake networks have, more than four times the ether currently staked.
The report explained:
Assuming the staking rate converges over time to the 60% average of other large networks, the number of validators could increase from $0.5 million to$ 2.2 million and the annual yield in ETH would fall from 7.4% today to around 5%.
14% of the issuance of ether is currently staked, and cannot be withdrawn until the Shanghai update is finally applied. Other protocols, like Solana and Cardano, have approximately 70% of their issuance staked, according to data from Staking rewards. New Staking Trends
JPMorgan also elaborated on the destiny of these new funds that they estimate new investors will be staking. The firm believes that most of these funds will go toward platforms such as Lido, which present several benefits when compared to maintaining hardware infrastructure.
The report states these platforms “give liquidity to staking assets that would otherwise be locked into staking contracts by providing an equal amount of derivative token in exchange for ETH, which can be traded.”
As the report suggests, these derivative tokens can be also positioned in different decentralized finance platforms to compound earnings by also staking them. Also, they facilitate bypassing the requirement of staking at least 32 ether, allowing small investors to also participate in protocol validation tasks in staking pools.
Exchanges like Coinbase and Kraken also offer staking services for Ethereum, but regulatory headwinds might thwart these services in the U.S. Kraken recently stopped its staking programs in the U.S. and was fined $30 million by the SEC to settle on charges of offering unregistered staking services. However, users in foreign countries will also be able to stake their ethereum tokens using these services.
This new configuration of the staking panorama, could result in an even higher concentration of funds in fewer hands, bringing concerns about the resilience of these platforms against attacks in the future. Tags in this story Coinbase, Ethereum, jpmorgan, Kraken, Lido, Shanghai upgrade, staking, Withdrawals
What do you think about JPMrogan’s predictions on Ethereum staking? Tell us in the commenters section below. Sergio Goschenko
Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved. Three Arrows Capital Co-Founder Announces New Crypto Venture Open Exchange Amid Bankruptcy Controversy NEWS | 15 hours ago Russian Charged With Laundering Ransomware Proceeds in Crypto Pleads Guilty in US NEWS | 20 hours ago
Image Credits: Shutterstock, Pixabay, Wiki Commons, William Barton, Shutterstock.com Previous articleState-backed Crypto Mining Farm under Construction in Russia’s Buryatia Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItCentral Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year
The Central Bank of Brazil has confirmed that the institution will run a pilot test regarding the implementation of its proposed central bank digital currency (CBDC), the digital real. Roberto Campos Neto, president of the bank, also stated that this ... read more.Oman to Incorporate Real Estate Tokenization in Virtual Assets Regulatory Framework Argentinian Securities Regulator Launches Innovation Hub to Discuss Regulated Crypto Investments Bill ‘On Digital Currency’ Caps Crypto Investments for Russians, Opens Door for Payments Microbt Reveals Latest Bitcoin Mining Rigs — Machines Produce up to 126 TH/s With Custom 5nm Chip Design