{"id":13590,"date":"2022-08-18T15:08:25","date_gmt":"2022-08-18T15:08:25","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/coinbase-could-be-a-material-beneficiary-of-ethereums-merge-transition-jpmorgan-analyst-says-finance-bitcoin-news\/"},"modified":"2022-08-18T15:08:25","modified_gmt":"2022-08-18T15:08:25","slug":"coinbase-could-be-a-material-beneficiary-of-ethereums-merge-transition-jpmorgan-analyst-says-finance-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/coinbase-could-be-a-material-beneficiary-of-ethereums-merge-transition-jpmorgan-analyst-says-finance-bitcoin-news\/","title":{"rendered":"Coinbase Could Be a Material ‘Beneficiary’ of Ethereum’s Merge Transition, JPMorgan Analyst Says \u2013 Finance Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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JPMorgan analyst Kenneth Worthington says digital currency exchanges like Coinbase will end up being a meaningful \u201cbeneficiary\u201d of Ethereum\u2019s long-awaited transition from proof-of-work (PoW) to proof-of-stake (PoW). Based on $2K ethereum prices and a 5% ethereum yield, Worthington explained that The Merge could boost Coinbase\u2019s annual income by $80 to $100 million from staking services.<\/strong><\/p>\n

As the Financial Giant\u2019s Market Strategists Focus in on The Merge, JPMorgan Analyst Says Staking Revenue Could Bolster Coinbase<\/h2>\n

In 29 days, the Ethereum network is expected to implement<\/a> The Merge on or around September 15, 2022. It will be a very big deal for the chain that has operated as a PoW blockchain for seven years. That\u2019s because the network will fully transition into a PoS distributed ledger system. Four days ago, Bitcoin.com News reported<\/a> on JPMorgan (NYSE: JPM<\/a>), strategists saying Ethereum Classic (ETC)<\/a> could benefit from The Merge, as ether miners will be forced to mine another Ethash-based cryptocurrency.<\/p>\n

This week, JPMorgan analyst Kenneth Worthington explained<\/a> in a note to investors that the crypto exchange Coinbase Global<\/a> (Nasdaq: COIN<\/a>) could be a \u201cmeaningful beneficiary\u201d of The Merge<\/a>. The investment bank\u2019s analyst also noted that staking revenue could bolster exchanges like FTX, Binance, and Gemini as well.<\/p>\n

\u201cWe see the staking revenue opportunity bigger (proportionally) than the income opportunity given we expect institutional staking clients will contribute meaningfully to [ether] staking revenue, but much less so for institutional customers,\u201d Worthington said. \u201cThe vast majority of the economics remains with retail,\u201d the JPMorgan analyst added. In order to be a validator 32 ether is required to stake on your own, but a number of exchanges offer ethereum staking services with negligible threshold requirements to earn from staked assets.<\/p>\n

JPMorgan\u2019s Worthington Foresees The Merge Boosting Coinbase Revenue up to $100 Million<\/h2>\n

At the time of writing, Coinbase is one of the largest ETH<\/a> holders in terms of validators, according to the ETH Staking dashboard<\/a> hosted on Dune Analytics. Out of the 13,326,533 ether deposited into the Ethereum 2.0 contract, Coinbase commands 14.7% or 1,966,080 ETH<\/a>. Crypto firms like Kraken, Binance, Bitcoin Suisse, and Bitstamp also have significant staking positions, but Coinbase and the liquid staking service Lido<\/a> have the largest. JPMorgan\u2019s Worthington expects Coinbase<\/a> to benefit significantly from the staking rewards.<\/p>\n

\u201cWe estimate Coinbase incremental annual staking revenue from the Ethereum Merge of $650 million based on $2,000 [ether] and 5% [ethereum] yield. We see [an] incremental annual income of $80-$100 million of staking income,\u201d Worthington\u2019s note detailed.<\/p>\n

Year-to-date, COIN is down 65.04% with a $357 per share high this year, but the current $85.44 is up from the $47 low share prices saw on June 30. Furthermore, on August 16, Coinbase summarized in a blog post<\/a> what customers \u201cneed to know\u201d about the upcoming PoW to PoS transition. During The Merge, Coinbase will \u201cbriefly\u201d pause ethereum transactions and it will not process withdrawals and deposits during the change. The Coinbase pause rule further applies to ERC20-based tokens built on top of the Ethereum network.<\/p>\n

On August 14, Coinbase and a number of exchanges were asked<\/a>: \u201cIf regulators ask you to censor at the <\/span>ethereum<\/span> protocol level with your validators will you: (A) Comply and censor at [the] protocol level (B) Shut down the staking service and preserve network integrity.\u201d Coinbase co-founder and CEO Brian Armstrong<\/a> responded to the question on Twitter three days later, on August 17. <\/span><\/p>\n

\u201cIt\u2019s a hypothetical we hopefully won\u2019t actually face,\u201d Armstrong wrote<\/a> on Thursday. \u201cBut if we did we\u2019d go with (B), I think. Got to focus on the bigger picture. There may be some better option (C) or a legal challenge as well that could help reach a better outcome.\u201d <\/span><\/p>\n

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32 ETH<\/a>, Binance<\/a>, Brian Armstrong<\/a>, COIN<\/a>, COIN shares<\/a>, Coinbase<\/a>, Ethereum<\/a>, Ethereum Upgrade<\/a>, ftx<\/a>, Gemini<\/a>, jpmorgan<\/a>, JPMorgan analyst<\/a>, JPMorgan strategists<\/a>, Kenneth worthington<\/a>, Lido<\/a>, merge<\/a>, PoS<\/a>, PoW<\/a>, PoW to PoS transition<\/a>, Proof of Work<\/a>, Proof-of-Stake<\/a>, stakers<\/a>, staking services<\/a>, The Merge<\/a>, Validators<\/a><\/div>\n<\/div>\n

What do you think about the commentary from JPMorgan\u2019s analyst Kenneth Worthington? Let us know what you think about this subject in the comments section below. <\/strong><\/em><\/p>\n

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\nJamie Redman <\/h6>\n

\nJamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

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