Even though JPMorgan CEO Jamie Dimon opposes cryptocurrency, two JPMorgan analysts believe proof-of-stake coin returns are attractive investments in this zero-rate environment.
According to a recent JPMorgan research, the launch of the energy-efficient Ethereum 2.0 network will promote the proof-of-stake consensus mechanism and make staking yields a more appealing source of revenue for both institutional and individual investors.
According to the authors, holders of staked coins on PoS blockchains are presently earning $9 billion per year on their staked holdings.
Analysts predict that when Ethereum switches from proof-of-work (PoW) to proof-of-stake (PoS), payments will more than double to $20 billion next year. By 2025, they expect staking yields in the blockchain sector to have doubled to $40 billion.
The two senior analysts also contrasted the financial incentives offered by staked cryptocurrency to cash, cash equivalents, and fixed income products such as US Treasury bonds:
“Yield earned through staking can mitigate the opportunity cost of owning cryptocurrencies versus other investments in other asset classes such as US dollars, US Treasuries, or money market funds in which investments generate some positive nominal yield. In fact, in the current zero rate environment, we see the yields as an incentive to invest.”
According to StakingRewards, yearly staking incentives for the top 10 cryptocurrencies by staked capitalization range from 3% to 13%. Although they are nominal yields, their actual returns are also influenced by the underlying currency’s market exchange rate.
The positive real yields of PoS coins, in addition to any expected market price appreciation, appeal to JP Morgan analysts, who write that staking not only lowers the opportunity cost of holding cryptocurrencies versus other asset classes, but it also pays a significant nominal and real yield in many cases.
Proof-of-stake coins aren’t the only cryptocurrency that JPMorgan is paying attention to. According to reports, the financial services behemoth is planning to provide a Bitcoin fund to a local group of clients. It may be released as early as this summer.
In contrast to previous passive Bitcoin funds offered by Pantera Capital and Galaxy Digital.