Demand for staking might increase further when, following the merge, Ethereum introduces the ability to withdraw ETH.
Given the wait for Ethereum 2.0, the sector will see growth in staking emerge from elsewhere.
Expect the emergence of a form of staking on all the layer-two solutions.
The arrival of institutional stakers and innovative staking opportunities might be among the trends this year.
Staking rewards might diminish with greater numbers of participants.
Staking is seemingly set for a big 2022. With Ethereum (ETH) planning an eventual move to a proof-of-stake (PoS) consensus mechanism this year, it will bring staking to thousands if not millions of users who’ve never tried it before, with the growth of ETH staking likely to feed into similar growth elsewhere.
But according to industry figures speaking with Cryptonews.com, general growth is not the only trend that staking can look forward to in the coming months. We can also expect to see increased institutional interest in staking, as well as the growth of liquid staking, staking via layer-2 protocols, and via GameFi (decentralized applications (dapps) with economic incentives) and NFT platforms.
And while the triple-digit rates of return offered by some staking services may not be sustainable in the long-term, they are likely to remain competitive for the foreseeable future, helping to spur staking’s continued growth.
Ethereum’s merge-driven growth
There’s little doubt that staking had a good 2021. According to data provider Staked.us, 7.7% of all coins in the crypto market were staked in the fourth quarter of the year.
Staked’s Q4 2021 report also found that proof-of-stake cryptoassets accounted for 31% of the market’s overall capitalization, up by 127% compared to a year previously. It also reported that rewards from staking equaled USD 15bn in 2021, up by 939% across the previous 12 months.
However, as big as staking became in 2021, industry participants agree that it will grow even further this year.
“Yes, I expect this will increase significantly, driven by increased Ethereum staking. The ‘merge’ [when the current Ethereum Mainnet “merges” with the beacon chain PoS system], which is ~6 months away, will increase the returns to ETH stakers by paying them the tips included in blocks,” said Tim Ogilvie, the CEO of Staked.
Ogilvie also suggests that demand for staking will increase further when, following the merge, Ethereum introduces the ability to withdraw ETH.
Another individual who estimates that the move to Ethereum 2.0 (or the “consensus layer“) will boost staking is Rick Delaney, a senior analyst at OKX Insights, who suggests that the successful completion of the move will attract more risk-averse ETH holders. But Delaney suggests that, given the wait for Ethereum 2.0, the sector will see growth in staking emerge from elsewhere.
“Meanwhile, the dominant smart contract platform’s exorbitant transaction fees and the persistence of environmental concerns generally encourage the creation of new proof-of-stake Layer-1s and Layer-2s. Combined, these factors make growth in the percentage of staked assets likely this year,” he told Cryptonews.com.
Staking might also be driven by the underlying growth in the crypto ecosystem, with new platforms more likely to be launched as proof-of-stake (rather than proof-of-work) protocols.
“Yes, [staking is] certainly growing; we are in a growth phase of adoption for Web3 and crypto, and staking is essential for securing PoS blockchains with the benefit of stable returns,” said Bob Ellison, the head of market at blockchain infrastructure provider Figment.
How staking might change in 2022
Looking at specific trends, 2022 might bring an influx of layer-2 platforms launching their own staking services.
“Most interesting to me is the likely emergence of a form of staking on all the layer-two solutions like Polygon (MATIC), Arbitrum, Optimism, et al. This is still in flux, but I expect it’s an interesting category to watch,” said Tim Ogilvie.
As a recent example, the Sandbox (SAND) launched staking on Polygon on February 14.
According to Rick Delaney, one other big trend is likely to be the arrival of institutional stakers, particularly once Ethereum 2.0 is up and running. This is also something Ethereum-focused blockchain company ConsenSys has predicted, with a December post outlining how it expects to attract big stakers.
“Elsewhere, innovative staking opportunities throughout the emerging GameFi and NFT sectors — like those pioneered by DeFi Kingdoms, TreasureDAO and EtherOrcs — will likely attract increased interest,” Delaney added.
Indeed, staking exploded on Axie Infinity (AXS) once the NFT-based game introduced it in October, with 25% of AXS’ supply staked in a matter of weeks following the launch. But it’s not only GameFi staking that will be big this year, according to Bob Ellison.
“Liquid staking with no bonding periods will become more attractive, such as Lido, and Figment’s River protocol,” he says.
As its name suggests, liquid staking enables users to stake assets while simultaneously continuing to use them with other (e.g. DeFi) platforms and services. In recent weeks, crypto has witnessed the launch of BENQI liquid staking protocol on Avalanche (AVAX), while the ClayStack platform launched on Polygon in December.
Triple-digit yields & sustainability
Eagle-eyed observers may have noticed that some staking platforms and/or services are offering occasionally ridiculous yields, sometimes involving as many as three figures. Skeptics are likely to suspect that such apparent generosity is hardly sustainable, although commentators point out that this depends on the models used by PoS cryptoassets and staking platforms.
“The rewards from staking come from programmed inflation and the fees paid in each block. Some of the planned inflation goes down over time, similar to Bitcoin‘s reduced emissions schedule,” said Tim Ogilvie.
He notes that the decrease in programmed inflation is generally quite gradual, so we may continue to see double- (or even triple-)digit yields for some time yet.
“So I would expect the yields will remain fairly consistent over the next 12 months or so. Staking rewards are the security budget a blockchain pays so keep the chain secure, so it’s money well spent in my mind,” he added.
Of course, some trading services or DeFi platforms may base their yields, not on predetermined inflation, but on promises of gains or profits. In this case, users may have to tread carefully in the future.
“One must be careful here, Figment only supports protocol staking, essential to how blockchain networks operate, not lending, liquidity, or some other arcane financial technique. If it sounds too good to be true, it probably is,” warned Bob Ellison, who urges users to learn how staking and yields work before venturing further.
More generally, Rick Delaney says he expects that staking rewards will diminish with greater numbers of participants. “The yields earned via the most popular opportunities may drop, but emerging staking protocols should generate comparatively high percentage returns until they become widely adopted,” he predicted.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
The founder of the decentralized exchange, dYdX, asserts that individuals involved in cryptocurrency development should direct their efforts toward international markets beyond the United States for the upcoming five to ten years.
Antonio Juliano conveys to his audience of 49,400 on the social media platform X that the prevailing regulatory uncertainty within the United States does not merit the associated challenges or concessions.
Juliano contends that it would be more prudent for cryptocurrency developers to establish their products in alternative countries and subsequently re-enter the United States from a position of strength.
“Cryptocurrency developers would be well-advised to temporarily discontinue catering to the US market and instead seek re-entry in a span of 5-10 years. The complications and compromises involved do not warrant the endeavor. Moreover, a substantial portion of the market exists overseas. It is recommended to innovate in those regions, ascertain product-market fit, and then return with greater bargaining power…
The paramount objective shared among all stakeholders is to secure a significantly more potent product-market fit for cryptocurrency. The pursuit of a robust product-market fit does not necessitate flawless distribution. A multitude of substantial overseas markets present avenues for experimentation.”
Juliano articulates that advocating for more amiable cryptocurrency regulations demands time, although the process could be expedited if developers manage to introduce products that elicit consumer demand.
“However, this perspective does not undermine the importance of efforts to influence US cryptocurrency policy. On the contrary, such endeavors are absolutely vital. Given the protracted timeframe required (in anticipation of re-entry), and considering that much of the world takes cues from the United States, it becomes evident that our progress in shaping policies hinges upon achieving global-scale product usage.”
The dYdX founder proceeds to emphasize that, with time, American citizens will come to realize that cryptocurrency is inherently aligned with US values and principles.
“The tenets of cryptocurrency closely align with American values. What concept could be more quintessentially American and reflective of capitalist ideals than a financial system conceived for the people, driven by the people, and answerable to the people? This, indeed, constitutes the very essence of our endeavor.”
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
Bloomberg Intelligence’s senior macro strategist, Mike McGlone, is conveying a pessimistic outlook for Bitcoin (BTC) in the immediate future.
During a recent interview on Kitco News, McGlone underscored that Bitcoin is currently displaying bearish signals even amidst the ascent of other high-risk assets.
“In the event of a downturn, adhering to a rule prevalent in bear markets, resources across the board could witness a reduction in value, and Bitcoin will not be an exception.
A crucial observation is the necessity for Bitcoin to exhibit divergent strength at a certain juncture, akin to the behavior of treasury bonds and gold in a deflationary economic environment. Regrettably, this pattern has not materialized.
After attaining its peak towards the conclusion of Q1, reaching approximately $31,000, driven by optimism and the influence of exchange-traded funds (ETFs), Bitcoin subsequently retraced to $25,000 or approximately $26,000. Presently, it is manifesting divergent weakness in contrast to the concurrent upsurge in the stock market.”
According to McGlone’s analysis, the ongoing “economic reset” implies a continuation of Bitcoin’s recent downward trend, although he anticipates that the premier cryptocurrency will ultimately attain a six-figure valuation.
“While I believe that Bitcoin will eventually achieve a valuation of $100,000, the onset of a global economic reset, as I anticipate, characterized by a standard deflationary recession leading to a decline in the housing and stock markets, analogous to the conditions of 2008—though arguably exacerbated due to the ongoing removal of liquidity from the system—Bitcoin’s role as an influential precursor comes to the forefront.
This underscores my point that Bitcoin has recently been taking on the role of a harbinger of trends. Its value ascended briefly to around $31,000, only to subsequently trend downwards. From my perspective, it serves as a leading indicator for a majority of high-risk assets.”
As of the time of writing, Bitcoin is trading at $26,079.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
Shiba Inu’s (SHIB) Latest Layer-2 Scaling Solution Nears Public Relaunch Following Recent Technical Challenges
Shytoshi Kusama, the enigmatic lead developer behind the SHIB project, has shared in a recent blog post that significant progress has been made in addressing the technical setbacks that temporarily halted the operation of Shibarium, SHIB’s new layer-2 scaling solution. The initial release of Shibarium encountered network issues that prompted its temporary closure. However, Kusama assured the community that diligent testing and parameter adjustments have led to notable improvements.
Kusama elaborated, stating, “After extensive testing and parameter refinements aimed at achieving a ‘ready’ status, Shibarium has undergone enhancements and optimization. While still undergoing testing, it is now successfully producing blocks.” Additionally, to prevent a recurrence of the past network overload, Kusama revealed the implementation of a new monitoring system and supplementary fail-safe measures. These include rate limiting at the RPC (remote procedure call) level and an automated server reset mechanism in the event of another surge in traffic.
With these advancements in place, the team is on the verge of reopening Shibarium to the public. As part of this progression, more network validators will be integrated into the ecosystem on August 23rd. Kusama emphasized the significance of this step, remarking, “Tomorrow, additional validators will become operational, expanding the options available for staking BONE. This will allow for a distribution of rewards earned through their roles within our community. As testing concludes, we will once again prepare for public utilization.”
Shibarium’s previous technical difficulties were attributed to an overwhelming influx of users and transactions during its initial launch. As of the current writing, SHIB is trading at $0.00000798, marking a 0.4% increase over the past 24 hours.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
FTX’s co-founder, Sam Bankman-Fried, is currently seeking a temporary release from incarceration. The purpose behind this endeavor is to engage in collaborative strategizing with his legal representatives within the confines of the federal courthouse situated in Manhattan.
In a formal letter dispatched to US District Judge Lewis Kaplan on a Friday, Bankman-Fried’s legal team expounded that their client’s capacity to effectively scrutinize the extensive legal documents pertaining to his case has been significantly curtailed during his time spent incarcerated at the Metropolitan Detention Center (MDC) in Brooklyn.
Christian Everdell, the attorney representing Bankman-Fried, divulged that the government recently disseminated a voluminous three-quarters of a million pages of Slack communications. These were originally due several months prior. Expressing the urgency of the situation, Everdell articulated, “Only last week did the government furnish an aggregate of approximately seven hundred and fifty thousand pages of Slack communications that were originally stipulated for release months ago. Given the current timeline, it is a futile endeavor for Mr. Bankman-Fried to endeavor to review these materials.”
He underlined the pivotal necessity for Bankman-Fried to collaborate meticulously with his legal team, emphasizing his dire need to avail himself of an internet-enabled laptop within the courthouse premises. Such a resource would undoubtedly expedite the process of comprehensive document review, an imperative undertaking in light of his impending fraud trial scheduled for the forthcoming October.
In riposte to Bankman-Fried’s plea for reprieve, the prosecuting body voiced apprehensions regarding his adherence to the prerequisites concerning his planned defense strategy. Notably, they underscored that Bankman-Fried is yet to furnish the complete gamut of essential information regarding the counsel upon which he predicated his actions.
The prosecutors proffered caution that unless Bankman-Fried promptly discloses the minutiae regarding the counsel he received and the provenance thereof, any attempt to interject such a defense during the trial should be summarily proscribed.
Although the prosecutors extended an offer to facilitate the transfer of documents onto hard drives for Bankman-Fried’s perusal within the MDC premises, a viable laptop-based solution was deemed unattainable. Initially, the notion of relocating Bankman-Fried to a more compact, upstate correctional facility where he could access an internet-enabled laptop was contemplated by the prosecutors. However, this proposal was met with resistance from prison officials.
Regarded for its starkly onerous conditions, the Metropolitan Detention Center has cultivated a notorious reputation among its inmate population.
Bankman-Fried’s Incarceration Stemming from Unsanctioned Internet Utilization
As documented, Judge Kaplan sanctioned the re-imprisonment of the beleaguered cryptocurrency luminary, citing alleged instances of witness tampering.
In that juncture, Judge Kaplan pronounced that a strong prima facie case existed indicating that the accused had endeavored to tamper with witnesses on no fewer than two separate occasions.
The decision was additionally influenced by Bankman-Fried’s unsanctioned use of the Internet while released on bail under the guardianship of his parents at their abode located in California.
Judge Kaplan discerned that Bankman-Fried had indulged in excessive communication with various individuals via electronic correspondence, even resorting to the utilization of a virtual private network.
Concurrently, the disgraced progenitor of FTX is simultaneously grappling with novel allegations brought forth by the Department of Justice (DOJ). These allegations encompass the misappropriation of customer deposits, including the purported embezzlement of said funds.
An indictment filed on the most recent Monday delineates that Bankman-Fried stands accused of diverting and embezzling customer deposits from the FTX platform. The illicitly obtained funds were purportedly channeled towards political campaign contributions, collectively amassing a substantial sum exceeding one hundred million dollars, in advance of the 2022 US midterm elections.
The indictment further posits that despite Bankman-Fried’s intimate knowledge of FTX’s fiscal insufficiencies, he continued to channel the purloined funds into personal investments, acquisitions, and political campaign contributions.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
The U.S. Securities and Exchange Commission (SEC) is taking significant steps towards pursuing an appeal in their recent legal battle against Ripple, indicating a potential shift in the course of the lawsuit.
James K. Filan, an experienced defense attorney specializing in crypto-related legal matters, has shed light on the latest developments. District Judge Analisa Torres has initiated a structured process for considering the SEC’s request to present an interlocutory appeal—a move that would allow the SEC to contest certain aspects of the ongoing case.
It’s important to note that this preliminary step does not guarantee the authorization of an interlocutory appeal; rather, it signifies that the SEC has been given the opportunity to formally request such an appeal.
Judge Torres has outlined the timeline for this process in her official order. The SEC is expected to file their motion for the appeal by August 18th. Subsequently, Ripple is given until September 1st to submit their opposition papers. If the SEC deems it necessary, they have until September 8th to file a reply.
The news of these developments had an immediate impact on the cryptocurrency market. Following the announcement of the judge’s order, the value of XRP experienced a sharp decline. The price, which had been trading at approximately $0.571, dropped to around $0.499 at the time of writing. This decrease of over 12% aligns with the broader trends observed across the cryptocurrency landscape.
The legal clash between the SEC and Ripple began when the regulatory agency filed a lawsuit against the San Francisco-based payments company in late 2020. The SEC alleged that Ripple had engaged in the sale of XRP without registering it as a security.
In a significant turn of events last month, Judge Torres issued a ruling that had mixed implications for both parties. She determined that Ripple’s automated programmatic sales of XRP, which occurred on the open market, could not be classified as securities offerings—a pivotal point of disagreement between the SEC and Ripple.
However, the judge did uphold a key aspect of the SEC’s argument. She agreed with the agency’s assertion that Ripple’s direct sales of XRP to institutional buyers indeed amounted to a securities offering, reinforcing the complexity of the case.
As the legal battle continues to unfold, the spotlight remains on the actions and responses of the SEC and Ripple, and how their ongoing dispute could shape the future regulatory landscape for cryptocurrencies and digital assets.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.