JPMorgan analyst Kenneth Worthington says digital currency exchanges like Coinbase will end up being a meaningful “beneficiary” of Ethereum’s long-awaited transition from proof-of-work (PoW) to proof-of-stake (PoW). Based on $2K ethereum prices and a 5% ethereum yield, Worthington explained that The Merge could boost Coinbase’s annual income by $80 to $100 million from staking services.
As the Financial Giant’s Market Strategists Focus in on The Merge, JPMorgan Analyst Says Staking Revenue Could Bolster Coinbase
In 29 days, the Ethereum network is expected to implement The Merge on or around September 15, 2022. It will be a very big deal for the chain that has operated as a PoW blockchain for seven years. That’s because the network will fully transition into a PoS distributed ledger system. Four days ago, Bitcoin.com News reported on JPMorgan (NYSE: JPM), strategists saying Ethereum Classic (ETC) could benefit from The Merge, as ether miners will be forced to mine another Ethash-based cryptocurrency.
This week, JPMorgan analyst Kenneth Worthington explained in a note to investors that the crypto exchange Coinbase Global (Nasdaq: COIN) could be a “meaningful beneficiary” of The Merge. The investment bank’s analyst also noted that staking revenue could bolster exchanges like FTX, Binance, and Gemini as well.
“We see the staking revenue opportunity bigger (proportionally) than the income opportunity given we expect institutional staking clients will contribute meaningfully to [ether] staking revenue, but much less so for institutional customers,” Worthington said. “The vast majority of the economics remains with retail,” the JPMorgan analyst added. In order to be a validator 32 ether is required to stake on your own, but a number of exchanges offer ethereum staking services with negligible threshold requirements to earn from staked assets.
JPMorgan’s Worthington Foresees The Merge Boosting Coinbase Revenue up to $100 Million
At the time of writing, Coinbase is one of the largest ETH holders in terms of validators, according to the ETH Staking dashboard hosted on Dune Analytics. Out of the 13,326,533 ether deposited into the Ethereum 2.0 contract, Coinbase commands 14.7% or 1,966,080 ETH. Crypto firms like Kraken, Binance, Bitcoin Suisse, and Bitstamp also have significant staking positions, but Coinbase and the liquid staking service Lido have the largest. JPMorgan’s Worthington expects Coinbase to benefit…
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