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Ethereum proof of stake mechanism could be big says JPMorgan

Ethereum is soon going to move from the proof of work to the proof of stake mechanism. And this could bring a big change in the crypto staking industry, says JPMorgan. Ethereum will become a lot more efficient, which will increase scalability and also improve its chances of crossing Bitcoin. And at the same time, because of the popularity of Ethereum, the idea of staking will also gain a lot of popularity making the market much bigger.

What makes proof of stake great?

The proof of work consensus on Bitcoin, Ethereum and many other coins are very energy-intensive. This hinders scalability as with the increase in the number of users, the energy consumption will also increase. Therefore, Ethereum is moving to a proof of stake mechanism were to validate transactions, a minimum stake of 32 ETH will be needed in the system. People with lower holdings can participate in staking through apps that offer staking pool services.

Proof of Stake

Investors can generate a lot of additional income just by staking their coins which is why it’s getting really popular. Reports suggest that nearly $9 billion is generated in the crypto market manually through staking. And according to the analysts at JPMorgan, we can expect this number to be at $40 billion by 2025 with the arrival of ETH 2.0.

When people hold coins for a long period and have no intention of selling, no matter what, then staking is an obvious choice. Since, either way, you don’t care if your balance is locked or not, and you are generating an additional interest for holding your coins. This is why staking and the proof of stake mechanism is so much better than proof of work.

Exchanges offering interest on coins

As the popularity of staking increases, many apps are going forward and adding the option to stake through their platform. And they are giving a good amount of interest for the same. Bitbns, an Indian exchange, offers nearly 20% staking interest annually for ETH, while for Bitcoin it is at 12%. Other platforms, too, like Coinbase and Binance, offer good staking opportunities. A few days back, Coinbase announced that they would pay 4% interest on USDC holdings. Then we have Gemini that also announced a similar thing. All in all, with increasing popularity, we will see more exchanges providing the option and also an increased participation from users.

What are your thoughts on the use of the proof of stake mechanism in Ethereum? And do you think that this will become an even bigger part of the crypto industry by 2025? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.

Also Read: Grayscale fund accommodates ADA in their holding portfolio



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