JPMorgan analyst Kenneth Worthington says digital currency exchanges like Coinbase will end up being a meaningful “beneficiary” of Ethereum’s long-awaited transition from proof-of-work (PoW) to proof-of-stake (PoW). Based on $2K ethereum prices and a 5% ethereum yield, Worthington explained that The Merge could boost Coinbase’s annual income by $80 to $100 million from staking services.
“We see the staking revenue opportunity bigger (proportionally) than the income opportunity given we expect institutional staking clients will contribute meaningfully to [ether] staking revenue, but much less so for institutional customers,” Worthington said. “The vast majority of the economics remains with retail,” the JPMorgan analyst added. In order to be a validator 32 ether is required to stake on your own, but a number of exchanges offer ethereum staking services with negligible threshold requirements to earn from staked assets.
“We estimate Coinbase incremental annual staking revenue from the Ethereum Merge of $650 million based on $2,000 [ether] and 5% [ethereum] yield. We see [an] incremental annual income of $80-$100 million of staking income,” Worthington’s note detailed.
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