Cryptocurrency News

Ethereum Upgrade Could Jumpstart $40 Billion Staking Industry, JPMorgan


According to a report by JP Morgan, the upgrade to Ethereum could launch a $40 billion staking industry. JPMorgan estimates that the stake industry is currently worth $9 billion and that number could grow to $40 billion by 2025.

The report speculates that the launch of ETH 2.0 will lead to more adoption coin And staking can drive payouts up to $20 billion in the first years after launch. Whereas $40 billion is a number that can be reached by 2025.

Related Reading | Scaramucci’s Skybridge Capital Launches Ethereum Fund

The report was from two analysts at JP Morgan who said that returns from bets are an attractive investment in this zero rate environment. Referring to the low interest rates being offered by the banks on the savings of the customers.

Introducing Aerem 2.0

ETH 2.0 is an upgrade to the Ethereum network that will help improve network security and provide greater scalability. ETH 2.0 aims to improve the overall efficiency of the network by introducing sharding into the mix. Sharing is simply a process of dividing a database into smaller pieces so that the network is able to accommodate more load.

The ETH 2.0 upgrade will move the network from Proof of Work to Proof of Stake. Significantly reducing the amount of energy required to mine coins and confirm transactions on the network.

Since Proof of Work requires machines to solve mathematical equations to confirm transactions over a network, the amount of energy it consumes is tremendous. Bitcoin and Ethereum mining still use proof of work mechanisms, leading to growing concerns about energy consumption in the crypto mining industry. Mining is considered the 33rd largest consumer of energy in the world.

Current total DeFi market cap | Source: Crypto Total DeFi Market Cap on TradingView.com

Proof of Stake, on the other hand, achieves the same result as a transaction confirmation on a blockchain without solving complex mathematical equations. Proof of Share a. allows holders of coin To be the validator of a transaction. The mechanism uses a pseudo-random selection process to select a node to be the validator for the next block.

according to ethereum WebsiteThis will be done in three phases. The first is the beacon chain. Beacon Chain is already live and with it comes staking. It will also lay the foundation stone for future upgrades and coordinate the entire system.

Next is merge. This mainnet will be the merger of Ethereum with Beacon Chain. The merge is expected to go live in 2021.

In the end there will be the addition of the shard chain. The shard chain will enhance Ethereum’s ability to process transactions and store data. ETA 2022 has been scheduled for connecting the shard chain.

Staking yields significantly higher

The report went into depth about why this may be the new preferred method of investing. Staking offers a yield of up to 13% on crypto balances, and in some cases more. Compared to investments like traditional banks and bonds, it is a more attractive investment opportunity for investors.

“Yields earned through staking may reduce the opportunity cost of owning cryptocurrencies compared to other investments in other asset classes such as US dollars, US treasuries, or money market funds in which the investment generates some positive nominal yield.” — JP Morgan analysts report on the stake.

The report also suggested that the reward from betting could be a way to hedge against inflation. The rise of betting as a way to earn passive income is on the rise.

Related Reading | How Ethereum Could Reach $2 Trillion in Market Cap, Matthew Siegel

Already, the current market capitalization of the staking token has already exceeded $150 billion. And that number will only continue to grow as the bet becomes more mainstream.

JP Morgan is looking to give crypto options to customers despite its CEO Jamie Dimon not being in favor of crypto. There are reports that the company is preparing to offer to customers bitcoin fund.

Featured image from CYBAVO, chart from TradingView.com



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