JPMorgan Estimates Ethereum Shanghai Upgrade Might Bring More Investors to Stake in the Protocol

JPMorgan, one of the largest financial institutions in the world, believes that the arrival of the next Ethereum upgrade, codenamed Shanghai, will attract more investors to invest in the protocol. The firm believes that this number could be as high as 60% of the issued Ether, and this number is already being used on other blockchain networks.

JPMorgan Expects Ethereum Shanghai Upgrade to Bring More Funds to the Network

A recent JPMorgan report showed that the upcoming Shanghai upgrade, due to be applied in March, could bring more capital to the chain. The investment bank estimates that Shanghai will bring the percentage of Ethereum stakes in line with other popular proof-of-stake networks, more than four times the percentage of Ethereum currently staked on.

Report explained:

Assuming the staking rate converges over time to an average of 60% on other large chains, the number of validators could increase from $0.5 million to $2.2 million, and annual revenue of ether will fall from 7.4% today to about 5%.

14% of the issued Ether is currently at stake and cannot be withdrawn until the Shanghai Update is finally applied. According to other protocols such as Solana and Cardano, they account for approximately 70% of emissions. data from staking rewards.

New Betting Trends

JPMorgan also detailed the fate of these new funds, which they expect new investors to invest in. The firm believes that most of these funds will go to platforms such as Lidowhich provides several advantages over maintaining a hardware infrastructure.

The report states that these platforms “provide liquidity for assets that would otherwise be pegged to placement contracts by providing an equal number of derivative tokens in exchange for etherwhich can be traded.

As the report suggests, these derivative tokens can also be placed on various decentralized finance platforms to increase profits through staking. In addition, they allow you to bypass the requirement to stake at least 32 Ether, allowing small investors to also participate in protocol verification tasks in staking pools.

Exchanges such as Coinbase and Kraken also offer Ethereum staking services, but regulatory hurdles could prevent these services in the US. Kraken recently terminated its US staking programs and was fined $30 million by the SEC to settle allegations of providing unregistered staking services. However, users from other countries will also be able to stake their Ethereum tokens using these services.

This new configuration of the betting panorama could result in an even greater concentration of funds in fewer hands, raising concerns about the resilience of these platforms to future attacks.

What do you think of JPMrogan’s predictions for Ethereum staking? Tell us in the comments section below.