Ethereum Upgrades Could Jumpstart $40 Billion Staking Industry, JP Morgan

Best Owie

4 years ago

3 mins read

Picture of ethereum symbol with Ethereum 2.0 written underneath it

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Ethereum upgrades could jumpstart a $40 billion staking industry, according to a JP Morgan report. JP Morgan estimates that the staking industry is currently worth $9 billion and that this number could balloon to $40 billion by 2025.

The report speculates that the launch of ETH 2.0 would lead to more adoption of the coin and could increase staking payouts to $20 billion in the first years of the launch. While $40 billion is a number that could be reached by 2025.

The report was from two JP Morgan analysts who stated that the returns from staking are an attractive investment in this zero rate climate. Referring to the low-interest rates being given by banks on customer savings.

Introducing Ehereum 2.0

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

The ETH 2.0 upgrade will move the network from proof of work to proof of stake. Drastically reducing the amount of energy required to mine the coins and confirm transactions on the network.

Since proof of work requires machines to solve mathematical equations to confirm transactions on 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 purported to be 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 of confirming transactions on the blockchain sans solving complex mathematical equations. Proof of stake allows holders of a coin to be validators 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 the Ethereum website, this will happen in three stages. The first is the Beacon Chain. The Beacon Chain is already live and with it came staking. It will also lay the groundwork for future upgrades and coordinate the entire system.

Next is the Merge. This will be the merging of the Mainnet Ethereum with the Beacon Chain. The merge is estimated to go live in 2021.

Lastly will be the addition of the shard chains. Shard chains will increase the capacity of Ethereum to process transactions and store data. ETA for the addition of shard chains has been set at 2022.

Staking Pays Significantly More Yield

The report went in-depth about why staking might be the new preferred way of investing. Staking provides up to 13% yield on crypto balances, and more in some cases. Compared to traditional banks and investments like bonds, this is a much more attractive investment opportunity for investors.

“Yield earned through staking can mitigate the opportunity cost of owning cryptocurrencies versus other investments in other asset classes such as U.S. dollars, U.S. treasures, or money market funds in which investments generate some positive nominal yield.” – JP Morgan analysts report on staking.

The report also pointed out that rewards from staking could be a way to mitigate against inflation. The rise of staking as a way of earning passive income will be on the rise.

Already, current market capitalizations of staking tokens have already exceeded $150 billion. And this number will only continue to grow as staking becomes more mainstream.

JP Morgan has been looking to give customers crypto options despite their CEO Jamie Dimon not being in support of crypto. Reports are that the company is preparing to offer customers a Bitcoin fund.

Featured image from CYBAVO, chart from TradingView.com

Best Owie

Best Owie is a seasoned managing editor with a wealth of experience currently serving as the Managing Editor at NewsBTC. Best is a highly skilled professional with a track record of producing engaging and informative content. With a keen eye for detail and a passion for accuracy, Best is committed to ensuring that each article published meets the highest standards of quality.

Best has over six years of experience in the crypto industry and has overseen the creation and publishing of thousands of articles over the years. Best is always abreast of everything that is going on in the crypto industry in order to create and curate the most relevant content for readers. This shines through in Best’s publications, which are always clear and concise, enabling easy reading and understanding for all.

Best is also an avid learner and advocate for new technology. This has seen Best dive into topics in areas such as decentralized finance (DeFi), non-fungible tokens (NFTs), Layer 2 blockchains, etc. In addition to this, Best is a vocal member of the crypto community across various social media platforms such as X and Reddit. Best’s work garners tens of thousands of readers monthly, who rely on the information in these publications to keep up-to-date with everything happening in the crypto community.

Best’s articles explore breaking news, intricate systems such as yield farming, liquidity pools, and other decentralized finance (DeFi) systems. This is because Best understands the importance of information to gaining financial freedom and believes that everyone should have access to this information.

Best also believes in leveraging the blockchain for philanthropy to create the most positive social impact. This involves work with charitable organizations focused on financial literacy and education. With each article, Best lends a voice to important issues such as a more financially inclusive future, transparent systems for growth and development, and technology that is not self-serving but one that serves all of humanity.

When not curating engaging content, Best can be found reading a book with a cup of hot chocolate, enjoying a Netflix series, or exploring the outdoors with Green - the world’s most quiet and well-behaved Husky. Best’s interests also span other industries such as art, finance, and security, attending seminars and conferences in not just the crypto industry but other industries as well.

As an animal lover, Best is also involved with charities for animals, local shelters, and rescues. Best is also involved in local events that promote inclusivity, such as being a prominent member of hiking clubs and a cycling club, as well as being a part of a very happy group of animal lovers.

Best is a true professional in every sense of the word, with an exceptional dedication to producing high-quality work. This shines through in Best's work on and off the clock. These include advocating for inclusive crypto education for all, the impact of financial illiteracy, and the benefits of adopting new technologies such as cryptocurrencies. Best’s prolific career in the media industry is a testament of how hard work and dedication pays.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.