JPMorgan, the world’s leading financial institution, believes that the upcoming upgrade could bring in a significant increase to its profits. Codenamed Shanghai, the upgrade is expected to attract more investors to the Ethereum protocol. The agency estimates that this could lead to up to 60% of ether issuance being staked in various blockchain networks.
JPMorgan Hopes Ethereum Shanghai Upgrade Brings in More Funds for the Community
The recent JPMorgan report mentioned the following: the Shanghai Upgrade is scheduled to be rolled out in March, which could bring in more capital to the network. The financial institution estimates that the upgrade will bring Ethereum’s share of the stakes in various proof-of-stake networks to more than four times the current amount of ether staked.
The report stated:
Assuming that participation rate converges to 60% of the major networks, then the number of validators could increase from $0.5 million to $2.2 million and the annual return for ETH would drop from 7.4% to 5%.
At present, 14% of ether issuances are currently staked and cannot have their withdrawals until the Shanghai Upgrade is the last thing to be done. Other protocols such as Solana and Cardano also have high staking rewards.
New Staking Trends
JPMorgan also provided more details about the destination of these new funds, which they believe new investors will take part in. The agency believes that the majority of these funds will go towards platforms such as Lido, which has multiple advantages when compared to maintaining hardware infrastructure.
According to the report, these platforms have proved to be effective. “They offer liquidity to staking assets that would otherwise be locked in staking contracts by providing an equal amount of derivative tokens in exchange for ETH, which can be traded.”
These derivative tokens can be placed on different decentralized finance platforms to generate additional income by staking them. Additionally, it is possible to avoid the requirement of staking at least 32 ether. Small traders can also participate in protocol validation tasks for staking pools.
Exchanges such as Coinbase and Kraken have staking services available. However, regulatory hurdles may prevent these services from operating in the US. Recently, Kraken stopped all US staking applications and was fined $30 million for running unregistered staking services. Nevertheless, customers from other countries may be able to stake their Ethereum tokens using these services.
This new configuration of the staking landscape could lead to a greater concentration of funds in fewer hands, raising concerns about the resilience of these platforms to attacks in the future.
What do you think about JPMorgan’s predictions? Ethereum staking? Please leave a comment below.
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