As the proposed day for Ethereum’s switch to PoS draws closer, there have been numerous views concerning the aftermath of the merge. Some of these views are favorable, while others are not. However, a top firm specializing in analyzing crypto has aired its views.
The Switch Will Attract More Investors
A famous New York-based firm, Chainalysis, stated that the staking return of Ethereum will make it look like conventional securities. This was disclosed in one of its analyses yesterday.
The firm added that, as the second largest digital asset plans on switching to the PoS mechanism, this would attract traders who initially trade in securities and commodities. Chainalysis added the staking rewards would be identical to typical stock gains, attracting non-crypto traders, specifically institutional investors.
They added that the switch would expose institutional traders to a better choice of bonds with about 10%-15% returns on investment per year. Treasury bond returns are far smaller than these rates. They also stated that the digital asset would be more harmless to the environment once the upgrade is completed.
Additionally, the report revealed that the number of traders holding ETH worth $1M and above had surged massively in less than two years. They are now about 1100 as against 200 at the beginning of 2021.
There are chances that the switch will produce more institutional investors of Ethereum quicker than before. If this happens, it will back Chainalysis’s suggestion that institutional traders accept ETH as an attractive bond alternative.
The firm also believes that the harmless nature of the proposed Ethereum upgrade to the environment, coupled with faster time used and fees close to nothing, will pull more investors to stake in the digital asset.
Platforms Offer Synthetic Assets
The main ETH trading activities have been suspended temporarily due to the proposed upgrade to the consensus mechanism. Trading activities won’t commence until there is Shanghai upgrade scheduled for around six months or more after a successful transition.
Since Ethereum is locked, some crypto exchanges have devised a way to keep Ethereum trading running. Traders are offered synthetic assets that will denote the amount they invested in the digital currency pending the time trading activities fully restart. There is, however, no guarantee that these synthetic assets will remain at par with the main Ethereum.
Apart from the environment-friendly feature that the upgrade promises, it will likewise make trading easier. It will further reduce energy usage and transaction costs to a minimum. And the market will be more liquid than before.
Apart from Chainalysis, Joseph Lubin, the co-founder of Ethereum, also shared the same view about the expected benefits of the upgrade. He made this known in an official statement.
He added that they plan to eliminate institutional investors’ fear of Ethereum dipping to zero by declining ETH supply, coupled with continuous burning, which will reduce the total ETH available and increase the value.
