In a report released this week, JPMorgan highlighted the benefits of launching the Ethereum 2.0 network, which the bank says will popularize the proof-of-stake consensus mechanism, particularly With its low power consumption, the ability to collect staking returns.

Cryptocurrencies pay people to secure their networks. The most famous example is Bitcoin, which uses a Proof of Work mining algorithm. However, mining has drawbacks such as high energy consumption and technical difficulty. Therefore, staking is an alternative consensus mechanism (the means to verify and secure transactions).

In reality, with staking, you can buy a cryptocurrency in order to lock it or hold it in a smart contract. Once you close your stake, you vote to approve the trades (this happens automatically), and the network pays you for it.

Going back to JPMorgan's note, we can learn that the bank sees that crypto investors who practice staking currently generate about $9 billion in annual income in coins The digital they shut down.

Speaking of which, the bank expects that when Ethereum completes its transition from Proof of Work to Proof of Stake next year, that revenue will reach $20 billion annually. They then expect revenue from staking for all Proof of Stake cryptocurrencies to continue to explode, reaching $40 billion by 2025.

The bank went further in its enthusiasm, comparing the winnings on the bet with the returns on fixed income instruments such as government bonds: the return obtained from staking can It lowers the opportunity cost of owning a digital currency compared to other investments in other asset classes such as the US dollar, US Treasuries or money market funds. The investments generate some positive nominal returns. In fact, the current zero interest rate makes the returns an incentive to invest.

Finally, the bank stressed the importance of the returns that can be obtained by staking cryptocurrency: staking does not reduce the opportunity cost of holding crypto-only compared to in other asset classes, but in many cases cryptocurrencies pay significant nominal and real returns as well.

In fact, some research on staking offerings for major cryptocurrency exchanges shows that returns can exceed 10% annually.