Bank of America researchers said Friday that the long-awaited upgrade to Ethereum this week could spur institutional adoption. In a research note, the second largest US bank claimed that the ability for Ethereum users to stake (i.e. pledge assets to the network) could raise interest for large investors.
2nd largest cryptocurrency by market cap EthereumIs Be expected To complete its upgrade this week. Is known “Sickness“The upgrade will move Ethereum from a . proof-of-work blockchain to a proof-of-stake One.
It would get rid of miners and instead use validators – the people whoTo bet“Ethereum to keep the network secure and running. The upgrade is expected to build Ethereum”99% more energy efficient,” according to the Ethereum Foundation. And researchers from Bank of America say that this could pique the interest of institutions.
Bank of America analysts Alkesh Shah and Andrew wrote, “The significant reduction in energy consumption following the merger could enable some institutional investors to buy tokens, which were previously prohibited from buying tokens that run on the blockchain, which provide proof of work.” (PoW) used to take advantage of the consensus mechanism.” Kai in Friday’s note.
Both said that staking Ethereum and “generates a high quality yield (low credit and liquidity risk) as a validator”.—as opposed to “black-box on lending/loan applications”—May also inspire institutional adoption, In other words, institutional investors are more likely to participate in Ethereum staking to generate yields than to lend and borrow riskier Ethereum-based assets. DeFi Apps.I
Ethereum’s upgrade to proof-of-stake is expected to make the blockchain greener than proof-of-work cryptocurrencies like bitcoin—which is often the case. criticized This for the amount of energy used.
Bitcoin (and Ethereum at the moment) uses proof-of-work mining to keep the network secure. this system is required miners With powerful computers to solve complex mathematical puzzles to process transactions. And because a lot of power is required, so does a lot of power—which means it’s a highly energy-intensive business.
But while this week’s upgrade will make Ethereum green, it won’t immediately make it faster or cheaper to use. Raether, future upgrades For the network, post-merge, it is expected to decrease often sky gas charge.
Bank of America acknowledged this and said it could affect the price of the cryptocurrency this year. “The significant price appreciation of ETH from mid-July to mid-August may fade as investors digest that the imminent transition to Ethereum Proof of Stake (PoS) will not address scalability concerns or high transaction fees and wait-and-seekers.” -will be shifted to see the outlook regarding future upgradation,” the bank said.
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