Ethereum after upgrading to version 2.0, one trader stated that "Ethereum bet yields can be in the range of 10%-15%".
After weeks of anxiety because of macroeconomics, traders are focusing on progress in the cryptocurrency ecosystem. Especially the Ethereum Blockchain Smart contract with the Proof-Of-Stake mechanism and its implications for eth price.
In a conversation on Telegram, trader and analyst Alex Kruger said, "I'm very optimistic about Ethereum next summer as the Staking feature will deliver better returns than actual returns in traditional markets after consolidation."
Last week, Ethereum developers successfully tested the long-awaited consolidation phase of the 2.0 upgrade, which will allow users to keep money in their wallets to support network operations, in exchange for receiving new tokens. Therefore, staking is similar to the passive investment method.
According to Kruger, ether's yields can be in the range of 10%-15%. Blockchain analytics firm IntoTheBlock expects staking yields to be higher than the U.S. consumer price index, which stood at a four-decade high of 7.9 percent in February.
IntoTheBlock said in its weekly newsletter published on Friday: "Through consolidation with the share proof chain, the fees that miners previously earned will move on to obtained from bettors. This is expected to result in a bet bonus of between 7% and 12%."
Investors are likely to prefer any asset or investment strategy that offers a positive real yield. When adjusted for inflation, most traditional investments are now delivering negative returns. In the cryptocurrency market, Bitcoin cash now delivers a profit of -4.9% in real terms. While sending Ethereum into the Lido staking protocol yields inflation-adjusted returns of -3.9%.
Ethereum 2.0 attracts institutional investors
With the consolidation testing process successful, the researchers expect the launch of Mainnet to take place by the end of June. The adoption of institutional investors will increase once the Ethereum 2.0 upgrade process is completed.
Ilan Solot, partner at Targus Capital, said he was optimistic. The post-consolidation yield estimate is 10% or more. In addition, the move to proof-of-stake means that it will be easier for institutional investors to adopt it, when it comes to solving the energy-consuming problem of investing in mining Bitcoin or other coins that operate based on the Proof-of-work protocol.
The proof-of-stake consensus mechanism is more environmentally friendly than proof-of-work, which rewards token miners for solving complex mathematical puzzles aimed at validating transactions. That process consumes a lot of energy. Some sources said that Bitcoin Mining has carbon emissions comparable to that of developed countries, which has prevented institutions from adopting cryptocurrencies. The electric car maker, Tesla, stopped accepting bitcoin payments last year, citing environmental concerns related to mining operations.
Ruben Merre, CEO of the NGRAVE wallet, said in a LinkedIn post: "Beacon Chain (the consignment contract launched in December 2020) introduced the staking feature but did not change the way ethereum works. However, all will be different in 2022, when it merges with the mainnet, causing the consensus to change dramatically, reducing energy consumption by 99.95% and eliminating the carbon footprint."
In early March, more than 10 million Ethereum was locked in deposit contracts.
Store value and scalability
Finally, the consolidation has the potential to turn ether into deflationary assets or valuable storage assets, a story that is largely tied to bitcoin. IntoTheBlock notes: "After consolidation, the number of ETH released is expected to decrease by 90%, which will result in similar fees to reduce the supply of ether by 5% a year," he said.
The pace of Ethereum's supply expansion has slowed. The ethereum-1559 improvement proposal, implemented in August, introduced a partial combustion mechanism of fees paid to miners. Since then, more than 2 million ETH, totaling more than $5.78 million, has been destroyed, resulting in a 65.2% drop in net supply.
Some experts said that the Sharding upgrade period after consolidation will be a catalyst for eth prices to rise sharply. Sharding refers to the breakdown of the entire ethereum bar network in parts, called pieces to disperse the load. The change is said to be aimed at reducing congestion on the network and increasing the speed of transactions.
Laurent Kssis, ETF expert and director of CEC Capital, said: "After the merger will come to the sharding stage, creating favorable conditions for scaling. Will it signal that Ethereum's status as the dominant web3 blockchain is really worthy and sustainable."
According to Laurent, gas charges will not be addressed immediately because interest rates can rise and so will gas charges, but it will be interesting to consider whether gas charges and the ability to attract developers will look like in the early days of the upgrade. There will be fewer reasons for cryptocurrency projects to choose any of Ethereum's rivals.
Kssis added: "For me, the speed of transactions is significantly improved by using the segment chain, which makes it much more energy efficient and ultimately pays lower fees."
Data from CoinDesk shows that Ether has gained 13% in the past week, the biggest gain in nearly 2 months. On March 15, more than 180,000 ETH were withdrawn from centralized exchanges, indicating a decline in the number of coins available for sale in the market.
IntoTheBlock notes in its Telegram channel: "The last time ETH fruit exchanges were of this large scale was in October 2021, before the price jumped 15% within 10 days."
The cryptocurrency recently traded near $2,900 corresponding to a 1% increase on the day.
