In 2022, Ethereum formally adopted Proof-of-Stake (PoS) as a more secure and energy-efficient method of validating transactions and adding new blocks to the blockchain.
PoS and other consensus mechanisms are an integral part of network security. This change has significant implications for the Ethereum ecosystem, particularly in terms of staking – the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network.
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While staking has been around for some time, several factors are now converging to potentially drive a significant increase in ETH staking. In fact, a leading staking service provider has predicted an increase in staking activity and backed it up with compelling reasons.
So what does this mean for Ethereum, and why is staking becoming such a critical part of its blockchain infrastructure?
Q2 Stake Report Predicts Significant ETH Staking Rate Increase
Stake, a research subsidiary of the Kraken exchange, has launched its Q2 report, projecting that the ETH participation rate could see a significant increase from 20% to 35% over the next 12 to 18 months. This forecast was based on several factors, including the recent increase in Ethereum’s average staking yield from 5.2% to 5.8% year-over-year.
Furthermore, the Q2 Staked report’s prediction of a significant increase in the ETH staking rate could also have broader implications for the cryptocurrency market as a whole. If more users start staking their ETH, the circulating supply of the cryptocurrency will decrease, which could cause its price to rise.
This, in turn, could have a ripple effect across the entire cryptocurrency market, making it a crucial trend to watch in the coming months.
ETH total market cap currently at $218 billion on the daily chart at TradingView.com
What the ETH Stake Increase Means for Investors
One of the most obvious benefits is that a higher staking yield means investors can earn more rewards for their ETH staked. This could be especially attractive to long-term investors looking to maximize their returns.
Furthermore, the increase in stakes could potentially lead to a decrease in the circulating supply of ETH, which could increase its price. This means that investors holding ETH could see the value of their holdings increase.
But impact of increased stake in ETH it goes beyond simply earning rewards and possible price increases. It also has a positive effect on the overall health and stability of the Ethereum network.
By staking their ETH, investors essentially lock it in, making it more difficult for bad attackers to attack the network. This makes the network more secure and reliable, which could attract more users and investors to the platform.
Source: Coingecko
At the time of writing, the price of ETH sits at $1,798 according to CoinGecko, with a rise of 2.4% in the last 24 hours. However, it is worth noting that ETH has seen a seven-day drop of 8.5%, highlighting the characteristic volatility of the cryptocurrency market.
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