Analyst at JP Morgan has stated that although staking proffers lower opportunity cost, it will help cause a surge in price on the Ethereum Network.
According to the analysis, staking generates an estimated $9 billion in revenue for the crypto business each year.
The researchers believe that with the launch of ETH 2.0 next year, Ethereum’s change to proof-of-stake will encourage the use of the alternative consensus mechanism and staking.
According to Forbes, this could result in staking payouts reaching $20 billion following the launch of ETH 2.0 and $40 billion by 2025.
Staking compensates token holders instead of mining companies, making it more appealing to consumers and institutional investors. The following is taken from the report:
“Not only does staking lower the opportunity cost of holding cryptocurrencies versus other asset classes, but in many cases cryptocurrencies pay a significant nominal and real yield,”
It went on to say that as cryptocurrency volatility decreases, the potential to earn a positive actual return will become increasingly crucial in helping the crypto market become more popular.
According to JPMorgan research, the staking industry will generate millions of dollars in revenue for exchanges and companies who provide staking services and take a cut. Staking is expected to generate $200 million in revenue for Coinbase in 2022, up from $10.4 million in 2020.
It claims that staking and DeFi provide considerably greater returns than traditional banking, which has interest rates that are near zero or even negative in some cases.
“In fact, in the current zero rate environment, we see the yields as an incentive to invest.”
Ethereum staking is expected to increase
The possibility to receive yield from crypto assets through staking, according to the authors, will make digital assets more appealing as an asset class and may help to promote mainstream use of cryptocurrencies.
Ethereum, which has suffered a drop in hashrates, was addressed multiple times, with a full proof-of-stake switch predicted next year.
The ETH 2.0 Beacon Chain held just under 6 million ETH at the time of writing. This amounts to little over 5% of the total supply, valued at about $12.3 billion at current prices.
It was paying a 6.4 percent annual interest, which is far higher than any high-street bank.
Additionally, EIP-1559, which will be released later this month, will burn network fees, giving the Ethereum network additional deflationary qualities.