Staking could open the door to an influx of institutional money, which would facilitate mass adoption of cryptocurrencies.
Last week, Ethereum completed its migration from a Proof-of-Stake consensus mechanism, with the arrival of The Merge.
This is considered to have been one of the most important events in the history of blockchain and cryptoIt was the first time that an ecosystem based on a Proof-of-Work consensus mechanism, with a high consumption of computing and energy resources, changed to a faster and more efficient Proof-of-Stake.
Ethereum consensus mechanism change is expected Reduce your energy consumption by 99,95%, as well as its inflation rate of 75% and, most importantly, the introduction of rewards for long-term investors of between 4 and 8%, through staking.
This shift is causing changes in the crypto economy, as large institutional investors could begin to feel attracted to him stake. Big firms and governments have stayed away from Ethereum because their corporate social responsibility programs clash head-on with the alleged carbon footprint of mining operations.
Now that the mining barrier does not exist, it is expected that “Smart money” from institutions starts flowing into Ethereum, above all, by making use of services of staking, with which they will be able to increase their profits.
In this sense, JP Morgan analysts have already predicted that staking returns through Proof-of-stake networks could reach $40.000 billion by 2025, due to the influx of this “smart money”.
In fact, before The Merge, the Swiss bank, SEBA Bank launched a Ethereum staking service for institutions, a strategy that responded to the demand from its institutional clients of a service of this nature, which shows that JP Morgan's predictions could prove correct.
Big investors are also showing interest in the Liquid staking services and DeFi composability, looking for ways to expand the APY and utility of the assets they are using.
The problems of institutional staking?
While institutional staking could trigger mass adoption of crypto and boost token prices, it also has some issues that are worth analyzing.
The first of them is the current situation of the macro market. At the moment, one of the great barriers for institutions is the general lack of liquidity, which translates into more conservative investments.
To this problem, we must add the great ignorance that still prevails among the financial community. Just look at the traditional media, which is dedicated, almost daily, to discrediting the crypto world or launching all kinds of negative news, often from pure ignorance.
Finally, we cannot ignore the fact that the massive influx of institutional money could lead to a Serious decentralization problem in PoS protocolsIn fact, shortly after the implementation of The Merge, it was learned that 46% of Ethereum transactions are being validated by only two directions: Lido Finance and Coinbase.
However, as more staking providers enter the market, governance will become more distributed, while diversifying risks and improving the network's resilience to attacks and censorship.
[hubspot type=cta portal=20298209 id=38fb28e1-1dc1-40e3-9098-5704ca7fcb07]
