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In 2022, Ethereum officially adopted Proof of Stake (PoS) as a more secure and energy efficient method for verifying transactions and adding new blocks to the blockchain.
PoS and other consensus mechanisms are integral to network security. This shift has major implications for the Ethereum ecosystem, especially in terms of staking, the process of holding funds in a cryptocurrency wallet to support blockchain network operations.
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While staking has been around for a while, several factors have now converged that could potentially lead to significant increases in ETH rates. In fact, a leading betting service provider has predicted a surge in betting activity and backed it up with compelling reasons.
So what does this mean for Ethereum and why is staking becoming such an important part of its blockchain infrastructure?
Staked Q2 Report Predicts Significant Increase in ETH Stake Rates
Staked, the research subsidiary of the Kraken exchange, has published a report for the second quarter, which predicts that the ETH staking rate could increase significantly by 20-35% over the next 12-18 months. This prediction was based on several factors, including the recent increase in average Ethereum staking returns from 5.2% to 5.8% year-on-year.
Moreover, the prediction of the Staked Q2 report of a significant increase in ETH staking rates could also have broader implications for the cryptocurrency market as a whole. If more users start staking their ETH, the circulating supply of the cryptocurrency will decrease, which could lead to an increase in its price.
This, in turn, could have a ripple effect on the entire cryptocurrency market, making it a major trend in the coming months.
The total market capitalization of ETH is currently $218 billion on the daily chart of TradingView.com.
What the ETH Rate Increase Means for Investors
One of the most obvious benefits is that higher staking returns mean investors can earn more rewards for their ETH. This can be especially attractive to long-term investors who want to maximize their returns.
In addition, an increase in rates could potentially lead to a decrease in the circulating supply of ETH, which could lead to an increase in its price. This means that investors holding ETH may see their asset value rise.
But the impact of the ETH rate hike goes beyond just rewards and potential price increases. This also has a positive effect on the overall health and stability of the Ethereum network.
By staking their ETH, investors are essentially locking them up, making it harder for attackers to attack the network. This makes the network more secure and reliable, which can attract more users and investors to the platform.
At the time of writing, ETH is trading at $1,798, according to CoinGecko, and is up 2.4% in the last 24 hours. However, it is worth noting that ETH experienced a seven-day decline of 8.5%, which highlights the volatility that is characteristic of the cryptocurrency market.
– Featured image from Siam Blockchain