JPMorgan Estimates Ethereum Shanghai Upgrade Could Bring More Investors To Join The Protocol – News
JPMorgan, one of the largest financial institutions in the world, anticipates the arrival of the next Ethereum Upgrade, codenamed Shanghai, will attract more investors to lock their funds into the protocol. The firm believes this number could reach 60% of Ethereum issued, a number already seen in others Blockchainnetworks is used.
JPMorgan Expects Ethereum Shanghai Upgrade to Inject More Funds into the Network
A recent report by JPMorgan has revealed that the forthcoming Shanghai upgrade, due to be applied in March, could 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, more than four times the Ether currently staked.
The report stated:
Assuming the staking rate approaches the 60% average of other major networks over time, the number of validators could increase from 0.5 million to $2.2 million and the annual return in ETH would from 7.4% today to about 5%.
14% of Ethereum’s issuance is currently staked and cannot be withdrawn until the Shanghai update is finally applied. Other protocols, like Solana and Cardanohave staked about 70% of their issuance, according to data from Staking Rewards.
New staking trends
JPMorgan also addressed the fate of these new funds, which they expect new investors will invest in. The company anticipates that most of those funds will flow into platforms like Lido, which offer several advantages over maintaining hardware infrastructure.
The report states that these platforms “bring liquidity to staking assets that would otherwise be locked into staking contracts by providing an equal amount of derivative tokens in exchange for ETH that can be traded.”
As the report suggests, these derivative tokens can also be positioned on various decentralized finance platforms to increase profits by using them as well. Also, they make it easier to circumvent the requirement to stake at least 32 Ethereum, allowing retail investors to also participate in protocol validation tasks in staking pools.
Exchanges like Coinbase and Kraken also offer Ethereum staking services, but regulatory headwinds could thwart those services in the US. Kraken recently shut down its staking programs in the US and was fined $30 million by the SEC for charging fees for offering unregistered staking services. However, overseas users can also stake their Ethereum tokens through these services.
This new configuration of the staking panorama could lead to an even higher concentration of funds in fewer hands, raising concerns about the resilience of these platforms to future attacks.
What do you think of JPMrogan’s predictions? Stake Ethereum? Tell us in the comment section below.
photo credit: Shutterstock, Pixabay, Wiki Commons, William Barton, Shutterstock.com
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Source: Crypto News Deutsch
