It might not feel like ETH (Ethereum) is on a bullish and positive trend but when you peal back the onion and start looking at everything going on with Ethereum it starts to paint a different picture. In this article I'm going to go over some of the biggest changes and future plans Ethereum has and how it could affect the ETH price and crypto markets.
- Screenshots pulled from CoinGecko
ETH Staking
With new Ethereum staking we are seeing a dramatic shift away from mining for crypto and staking tokens to earn crypto. However in order to run a node for Ethereum it still vastly puts it out of the hands of many. Costing 32 ETH to power up your own node at least and risk it as well can be a costly $50,000 (roughly at current prices).
However many well known companies like Coinbase are allowing their customers to stake ETH with them in exchange for part of the fee. For example Coinbase pays roughly 3.3% while to the owners to ETH and takes a small cut themselves. This opens up the ability for many to now earn ETH with somewhat low risk (not your keys not your crypto remember).
This has also created an issue however with centralization of the blockchain where these companies are starting to hold a vast majority of the networks nodes and crypto token. But is this concern misunderstood?
Over the last few years as staking has grown in popularity many other platforms who have now gone under marketed their services as staking crypto and earning a return on it. However this couldn't be further from the truth. What happened is these companies would offer a higher APR then the staking of the tokens were actully printing out. For example ETH pays out at the moment a 3.8% APR on staked tokens.W With a total of 825,000 Validators and 26.2 ETH staked at the moment of writing this article. Many of these so called staking companies were offering people 5%+ APR on their tokens which clearly meant they where up to something else to try and generate that higher APR and be compeditive. What you got instead though was false marketing and a system that came crashing down on itself.
However the ones that have made it like coinbase for example offering now 3.3% APR means they are taking a 0.5% cut roughly of the profits of ETH. Which might not sound like a lot but if just 25,000 ETH was staked there Coinbase would be walking away with roughly 125 ETH profit per year or $187,500 at current market values. A decent amount of pure profit income as there's very minimal expenses to running ETH nodes.
This is why most people have a bad rep with staking is because of false marketing and shady tactics from these so called business that came crashing down. But I would equally say do your own research and know the red flags. Clearly if any company is offering you a APR that is higher than the staking amount APR that's a huge red flag.
Another large improvement to this section is now a new type of token on DeFi platforms called LST. LST otherwise known as Liquidity staking tokens allows someone to deposit ETH and get LST tokens. These LST tokens can be bought, sold, traded and placed on to DEFI platforms without the heafy ETH fees. But this all comes down to again how much do you trust the company issuing out these LST's
It's clear that staking still needs some work however it's starting to evolve and with the massive amounts of money and funds being dumped into it I personally fell the staking especially on ETH are going to become on of the central development hot beds over the coming years.
ETH - ETF
They look almost the same but that last letter is what is the big difference. Currently Bitcoin ETFs have been shot down, delayed and pushed back. However there's now a new push for the Ethereum backed ETF which would be a spot ETF. It would allow large institutional investors to buy ETH at spot price.
This would be just another huge way for billions if not trillions of dollar to flood into the crypto market cap but in particular ETH and later BTC. Thus pushing everything to new highs as capital continues to filter in.
Overall these things to me show a very positive side of crypto and the possibilities with it all.