Chainalysis: Ethereum Staking Will Attract Investors After The Merge

According to Chainalysis, Ethereum stakers can earn up to 15% annually, compared to US Treasury bonds giving investors a 3.5% return.

The transition of Ethereum (ETH) to proof of stake — which will introduce staking rewards — is expected to boost institutional interest in the post-merger token, Chainalysis said in its latest report.

The blockchain security firm also expects ETH to behave like bonds and commodities, which will give institutional investors even more confidence in the token.

“However, Ether’s price could decouple from other cryptocurrencies following The Merge, as its staking rewards will make it similar to an instrument like a bond or commodity with a carry premium.”

Institutional investors may be attracted by the high staking rewards, which can increase up to 15% annually. For comparison, U.S. Treasuries give investors a 3.5% yield.

The report notes that institutional investors — wallets staking over $1 million in ETH — have grown more than fivefold in the past year. According to the report, institutional investors rose to 1100 in August 2022, compared to less than 250 in January 2021.

With The Merge designed to cut Ethereum’s energy use by 99%, Chainalysis says institutional investors with a strong commitment to the asset will become more comfortable with the asset.

Chainalysis wrote that Merge will serve as a precursor to further improvements being planned for the Ethereum ecosystem.

According to the blockchain analytics firm, scalability improvements aimed at improving Ethereum’s speed and reducing high gas fees are imminent after The Merge.

Ethereum co-founder Vitalik Buterin previously said that The Merge would only make Ethereum 55% complete. Buterin added that the other stages of blockchain network development are “the surge, the verge, the purge, and the splurge.”

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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