Following the introduction of Ethereum staking on the top US-based trading platform Coinbase, JPMorgan, an American transnational investment bank and a global leader in financial services, holds that the top crypto marketplace will be a major beneficiary of the Ethereum Merge upgrade. Meanwhile, the Merge has been scheduled for September 15.
According to a note sent to clients by JPMorgan, the Ethereum transition to proof-of-stake (PoS) will usher in a “bigger revenue opportunity” for the digital assets exchange, Coinbase.
This statement stems from the fact that the widely used crypto exchange recently introduced Ethereum (ETH) staking to institutional clients. The service was introduced by the exchange in early August.
Brian Armstrong, the CEO of Coinbase noted that Ethereum (ETH) staking will benefit the company’s business model.
Kenneth Worthington, a financial analyst at JPMorgan investment bank wrote in the note to clients; “we see Coinbase as a meaningful beneficiary of the Ethereum Merge. Coinbase is bigger in Ethereum than was intuitive to us, thus leading directly to a bigger revenue opportunity.”
“We believe that Coinbase has taken a series of steps to maximize the Ethereum staking revenue opportunity,” Worthington added.
The bank further disclosed that Coinbase has a 15% market share in Ethereum (ETH) assets. According to Kenneth Worthington, Coinbase’s market share is tilted toward institutions other than retail customers.
This is so because institutions tend to hold more Ethereum (ETH) and Bitcoin (BTC), while retail customers may likely hold other highly speculative tokens.
Post-Merge, JPMorgan forecasts that Coinbase can realize more than $650 million in annual ETH staking income if and only if Ethereum (ETH) trades around $2000 with a 5% yield rate. At press time, Ethereum (ETH) is trading for $1,833.65, according to Coinmarketcap data.
Ethereum (ETH) Merge Approaches
Ethereum is set to undergo its biggest upgrade ever since the blockchain’s emergence in 2015 courtesy of Vitalik Buterin and other co-founders. The Merge scheduled for September 15, will transition the second-largest crypto blockchain and largest smart contract platform from a proof-of-work (PoW) consensus algorithm to proof-of-stake (PoS).
While PoS will make the Ethereum blockchain more scalable, less costly to use, and complete according to Vitalik Buterin, some players in the industry like Justin Sun, and the popular Chinese crypto miner, Chandler Guo believe that PoW is still essential in the industry.
To this end, there is a plan to initiate a post-Merge Ethereum (ETH) fork to preserve PoW as well as miners’ financial activity. Nonetheless, Ethereum co-founder Vitalik Buterin noted that the planned “EthereumPOW” blockchain will not succeed nor gain substantial adoption.