American multinational investment bank and financial services holding company, JPMorgan CEO Jamie Dimon, two senior analysts at his firm argued in a report this week that as blockchains running more energy-efficient networks than bitcoin and ethereum increase in popularity, a new way to make money, called staking, will gain traction as a source of revenue for institutional and retail investors alike.
Bitcoin and Ethereum blockchains use an energy-demanding process called proof-of-work to ensure all transactions on the network are valid and that the network’s distributed record is accurate. Ethereum is switching from proof-of-work to proof-of-stake, where investors lock-up their funds on the blockchain in exchange for rewards to create a more scalable and energy-efficient system.
Staking generates an estimated $9 billion worth of revenue annually for the crypto industry and total value locked in Eth 2.0 surpassed $8 billion in the beginning of April.
“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,”
“In fact, in the current zero rate environment, we see the yields as an incentive to invest.
The current market capitalization of proof-of-stake tokens is over $150 billion, according to the report. Authors predict that the ability to use crypto assets to earn yield through staking will make digital assets a more attractive asset class and could help to grow mainstream adoption of cryptocurrencies.
Ethereum 2.0 was originally supposed to launch in January 2020, and is now expected to enter its final launch phase in 2022.
Full article on Forbes.