Ethereum's adoption of the Proof-Of-Stake (PoS) consensus algorithm will more than double the value of assets involved in staking, according to a new study by Binance Research.
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Binance Academy defines staking as:
“The process of storing funds in a cryptocurrency wallet to support blockchain network operations. In essence, it consists in blocking cryptocurrency in order to receive rewards. ”
Binance Research specialists analyzed the cryptocurrency market based on the PoS mechanism. As an example of a “clean” application of the algorithm, the report noted the Algorand project, where the influence of users on the production of a new block is proportional to their share of ALGO tokens. ICON and EOS networks use another version of PoS – with delegation (DPoS).
In addition, distribution models (Stellar), blocking one coin to receive rewards in another (NEO / GAS) and masternode systems (Dash, TomoChain and ZCoin) can be used.
Ethereum will be the biggest player in the PoS space, analysts said. The Ethereum Foundation and other stakeholders have allocated nearly $ 10 million to develop solutions for Ethereum 2.0, they recalled.
“Due to the fact that Ethereum is the second coin by market capitalization and one of the longest blockchain projects, this may prompt many others to switch to PoS,” the report says.
Given the second cryptocurrency, the total capitalization of crypto assets supporting (or planning to support) staking is $ 25.8 billion.
Overview of the largest crypto assets for staking. Source: Binance Research
Excluding Ethereum, as of October 24, the total capitalization of PoS projects is $ 11.2 billion, of which $ 6.4 billion is used for staking.
The highest interest rates are offered by such projects as Synthetix (61.9%) and Livepeer (102.7%). However, it should be noted that a higher return on rates does not necessarily provide benefits to users, since it is necessary to consider the possible depreciation of an asset in the spot market and other risks, analysts stressed.
Profitability at stake rates. Source: Binance Research
“With Ethereum's upcoming transition to PoS, staking is expected to occupy an increasingly significant part of the market. As more and more participants in the infrastructure support staking, the ecosystem will be able to get further development, ”the researchers said.
Recall that according to the calculations of Collin Myers from the startup ConsenSys, the validators of the Ethereum 2.0 network, which is scheduled to be launched in the first quarter of 2020, will be able to receive up to 10% per annum for staking.
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