More investors might choose Ethereum staking over trading
According to Coinbase’s post, Ethereum staking returns are expected to face a gradual increase following the merger between the Ethereum mainnet and Beacon Chain. Around June of this year, yield staking could increase from 4.3-5.4% APR to 9-12% APR.
With the complete merger of the two chains, Coinbase expects an increase in staking yields as rewards will now include fees that are currently being paid to miners. With more rewards being distributed to validators, the profitability of staking contracts should, in fact, increase gradually.
A nearly double increase will most likely attract more investors to the Ethereum staking contract which already holds 1.92 million ETH. Some investors have already decided to join the Ether staking contract by moving 28,000 ETH in a single trade to the contract.
How might increased staking share affect the Ether market?
The main benefit for the market would be the locking period that comes with every contract. With no funds circulating on the market, traders could expect less selling pressure, especially with the accelerating deflation of Ethereum.
Previously, with the implementation of EIP-1559, the fee burning mechanism was introduced on the network, which led to the withdrawal of a large amount of cryptocurrency from the market. According to the WatchTheBurn service, 1.9 million ETH have already been burned and taken off the market.
With Ethereum trading at $2,370, the value of the burned coins remains at $4.5 billion. With such a significant volume being moved off the market, it is easier for an asset to move through the range of resistance zones and rally up.
At press time, Ethereum is trading at $2,394 and has lost 10% of its value in the past 24 hours, following global risk in financial markets.
