JPMorgan Report: Ethereum 2.0 Could Create $40B Staking Industry by 2025
While the JPMorgan CEO, Jamie Dimon, may not be a crypto supporter, two JPMorgan analysts say that proof-of-stake coin yields are a very attractive investments in the current zero-rate environment.
The up and coming launch of the energy efficient Ethereum 2.0 network is poised to popularize the proof-of-stake consensus mechanism and make staking yields a more attractive source of income for both institutional and retail investors, says a new JPMorgan report.
According to the report authors’ estimate, holders of staked coins on PoS blockchains are at the moment generating around $9 billion in revenue annually from their staked holdings.
When Ethereum’s transition from proof-of-work (PoW) to proof-of-stake (PoS) will be completed next year, the analysts expect payouts will more than 2x to $20 billion. The reports projects staking yields across the blockchain industry to double again to a whopping $40 billion by 2025.
The JPMorgan report also compared the financial incentives with staked cryptocurrencies to cash, cash equivalents, and fixed income instruments like U.S. Treasury bonds:
“Yield earned through staking can mitigate the opportunity cost of owning cryptocurrencies versus other investments in other asset classes such as US dollars, US Treasuries, or money market funds in which investments generate some positive nominal yield. In fact, in the current zero rate environment, we see the yields as an incentive to invest.”
According to StakingRewards, among the top ten cryptocurrencies by staked capitalization, annual staking rewards range from the 3% range to as high as 13%. Although these are nominal yields, and their real ROIs are also a function of the market exchange value of the underlying currency.
The report authors find the positive real yields of PoS coins, in addition to any expected market price appreciation attractive:
“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.”
PoS coins aren’t the only cryptocurrencies being praised by JPMorgan analysts. The financial services giant is reportedly preparing to offer select clients a Bitcoin fund. It could launch as soon as this summer.
JPMorgan’s new crypto product may also be actively-managed, in contrast to similar passive Bitcoin funds offered by Pantera Capital and Galaxy Digital.
