Ethereum’s ‘Shanghai’ Upgrade Increases Staking Ratio: JP Morgan | coindesk JAPAN | Coindesk Japan

Ethereum’s “Shanghai” upgrade, scheduled for mid-March, will boost the staking ratio in the medium term, JPMorgan said in a Feb. 8 report.

The current 14% ratio has plenty of room to rise, the bank said. Because the average of other Proof of Stake (PoS) networks is about four times that.

“Assuming staking ratios converge over time to 60%, which is the average of other major PoS networks, validators will see 500,000 to 2.2 million,” said strategists at JP Morgan, led by Nikolaos Panigirtzoglou. , and yields will fall from the current 7.4% to about 5%.” In PoS systems, validators are responsible for proving that blocks are correct and can be added to the blockchain.

Most of the future staking growth will likely shift to liquid staking protocols like Lido Finance, JP Morgan said. These protocols “enable liquidity for staking assets that would be locked into staking contracts by offering an equal amount of derivative tokens in exchange for staked Ethereum (ETH).”

JP Morgan notes that Liquid Staking Protocol derivative tokens have typically traded at lower prices than their underlying assets, but are converging on par with Ethereum (ETH) as the “Shanghai” upgrade approaches. ing.

The report states that such liquid staking protocols may become less useful as the upgrade date approaches. The counter-argument is that the utility of these protocols not only provides liquidity, but also acts as an intermediary for retail investors facing a 32 ETH ($52,000) staking barrier. It is said that it also works.

As a result, the liquid staking protocol has become a major player in decentralized finance (DeFi), raising concerns over network centralization.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Image: Shutterstock
｜Original: JPMorgan: Ethereum’s Shanghai Upgrade to Raise Staking Toward Proof-Of-Stake-Blockchain Average