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Ethereum post-merge staking rewards will likely be lower than anticipated

Ethereum (ETH) Transition from Proof of Work (POW) Proof of Stake ()PoS) The consensus mechanism (so-called merge) does not occur in June, as many have. predict..

As report To CryptoSlate On April 14, Ethereum’s core developers are not yet ready for the merge by the end of the third quarter. The long-awaited merger marks Ethereum’s move to PoS, minimizing energy consumption and making networks safer and more profitable.

Staking is one of the long-awaited features of the Ethereum network after merging.

According to IntoTheBlock, initial estimates claimed that staking would reward users with 12% to 15%. However, the percentage after merging seems to be much lower.

Significantly reduced staking yield after merging

but, Blog post When InteTheBlock subsequently modifies the condition and merges, the metric on the chain shows a significantly lower staking yield.

As of today, over 11.5 million ETH have been bet and locked on Beacon Chain Staking contracts. The amount of Ethereum bet continues to grow, as Staker not only has a current rate of return of around 5-7%, but also predicts a particularly promising future. 12-15% rate of return.

The amount of locked ETH represents about 9.5% of the total circulating supply. According to IntoTheBlock, on a dollar basis, growth can be assessed at near record highs, even though ETH market prices have fallen 37% from record highs since the beginning of November 2021.

Steaking has accelerated since the launch of stETH

This growth of staking ether has accelerated since the launch of stETH, a staking-derived token used as collateral. Aave Lending protocol. Unfortunately, the increase in bet ETH will reduce the reward proportionally.

In other words, the more ethers bet, the less rewards per ether bet.

In a sense, Ethereum staking is a victim of its success. The merge is delayed and “Several months,That could mean that the amount of ETH bet will increase further, resulting in lower yields.

According to IntoTheBlock, the amount of ETH bet is one of three key factors affecting bet rewards after a merge. These three factors are the amount of Ethereum gas charges paid by the user, the percentage of charges burned, and the number of ETH bet.

Significant reduction in gas charges and transaction volume

The amount of gas charges paid to use Ethereum is DeFi and NFT dry up. Trading volumes at OpenSea, the largest NFT marketplace, also declined, from about $ 250 million on February 1st to $ 70 million on April 14.

The trading volume of the similarly popular decentralized token exchange Uniswap, though not so much, has fallen by about 33% from its weekly highs in late January compared to last week.

However, there is no doubt that the urgency to execute a transaction is low because the market trend is relatively flat. As a result, traders are less willing to pay high fees.

Currently, miners earn non-burning transaction fees as a reward for maintaining their network. However, after Ethereum switches to PoS, transaction fees will be paid to staking instead.

Therefore, lower levels of network activity are also damaging the economic interests of ether holders.

6% is new 12%

According to IntoTheBlock, if the merger takes place in September 2022, Ethereum’s annual staking reward could be between 6% and 8%.

These yields may not be attractive, for example, they barely touch on US inflation, but the maturity of Ethereum, which has bet ethers of over $ 35 billion at current market prices. It reflects.

Ultimately, increasing the amount of ETH bet is good for the security of the Ethereum network, as it is more difficult and expensive to launch a 51% attack.


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