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JP Morgan says Ethereum’s Shangai Update may bring opportunities to Coinbase

JP Morgan says Ethereum's shanghai update may bring opportunities to Coinbase

TL;DR Breakdown

  • JP Morgan predicts that Coinbase may experience a sharp increase in revenue as the Ethereum network upgrade approaches.
  • After the Shanghai Fork, JPMorgan estimates that 95% of retail investors on Coinbase may be able to partake in staking Ethereum.

Crypto fans who have staked Ethereum are eagerly looking forward to the upcoming updates in the blockchain network. According to JP Morgan analysts, Coinbase may also significantly benefit from its upcoming network update. The Shanghai Fork upgrade is scheduled for March and will give people access to funds previously allocated towards its Beacon Chain, allowing users to be part of transaction validations as well as receive rewards in terms of newly-created Ethereum.

According to a recent research report from JP Morgan, Coinbase could experience an incredible surge in profits if users are enrolled for staking Ethereum without requiring them to lock up their Ether indefinitely. “This Shanghai Fork has the potential to open new doors for staking on Coinbase,” the analysts wrote. If this occurs, it will incentivize existing and future customers by providing them with enhanced rewards that can be earned by holding onto ETH tokens.

After the Shanghai Fork, JPMorgan estimates that 95% of retail investors on Coinbase may be able to partake in staking Ethereum—a move that could generate between $225 million and $545 million per year for the exchange. Currently, users must opt-in to staking their Ethereum since there is no way for them to retrieve any ETH or deposits they have earned—something this fork will alter. Additionally, JPMorgan projects that Coinbase already earns around $50 million each year through Ethereum staking.

Coinbase could experience some relief from the current crypto winter with the extra revenue generated through the Shanghai Fork. Last Wednesday, Coinbase declared that its Japanese services will eventually come to an end. Moreover, it was reported that over two-thousand jobs were cut in less than a year; 1,100 employees were laid off last June and around 950 employees lost their job just this month.

The investment bank cautioned that its hypothesis of Coinbase Ethereum holders being involuntarily enrolled in the coin’s staking program has not yet been confirmed by Coinbase management; however, its evaluation is based on previous actions taken by the organization.

Although Ethereum users will have the ability to opt out of staking their assets if the feature is created, JP Morgan analysts believe that most investors will not pass up on this opportunity due to the potential investment income it yields. “We anticipate few would turn away from such a lucrative profit margin,” they stated.

Since the Beacon Chain was established in December 2020, a total of $26 billion worth of ETH has been pledged to its staking program. Ethereum’s recent Shanghai upgrade follows their successful conversion to a proof-of-stake system last September, which saw an astonishing 99.99% decrease in energy use and carbon footprint according to the Crypto Carbon Ratings Institute report.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Damilola Lawrence

Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space.

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