JPMorgan, one of the world’s largest financial institutions, estimates that ethereum’s next Shanghai upgrade will attract more investors to pour money into the protocol. The firm believes that this amount could reach 60% of the issued ETH, which is the same amount already invested in other blockchain networks.
JPMorgan Predicts Ethereum’s Shanghai Upgrade Will Bring More Money to Network
A recent JPMorgan report suggested that the upcoming Shanghai upgrade, expected to roll out in March, could attract more capital into the network. The investment bank estimates that Shanghai will receive an equal percentage of Ethereum shares as other popular PoS networks, which is more than four times the amount of ETH currently staked.
“Assuming the collateralization rate accumulates over time to an average of 60% of the other major networks, the number of validators could increase from $500,000 to $2.2 million, while ETH’s annual yield would drop from today’s 7.4% to about 5%.”
14% of the issued ETH is currently staked and cannot be withdrawn until the Shanghai update rolls out.according to data Looking at Staking Rewards, other protocols such as Solana and Cardano have about 70% of the issued tokens staked.
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New trend of pledge
JPMorgan also detailed the fate of the new fund it estimates investors will join. The company believes that most of the money will go to platforms like Lido, which offer some benefits for maintaining hardware infrastructure.
These platforms “provide liquidity for pledged assets that would otherwise be locked in pledge contracts by offering an equivalent amount of derivative tokens in exchange for tradable ETH,” the report said.
As the report shows, this derivative token can also be injected into various decentralized financial platforms to increase returns through staking. Additionally, they help bypass the minimum 32 ETH collateral requirement, allowing retail investors to participate in the task of validating the protocol in the collateral pool.
Exchanges such as Coinbase and Kraken also offer staking services for ethereum, but the latest regulatory hurdle could hinder their growth in the United States. Kraken recently halted its staking program in the US and was fined $30 million by the SEC to settle charges of providing unregistered staking services. However, overseas users will be able to stake ETH using these services.
New evolutions in the staking landscape could lead to greater concentration of funds in fewer hands, raising concerns about their resilience to future attacks.
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According to Cryptoslate