Staking cryptocurrency tokens is becoming increasingly popular. It is one of the most sought after ways to generate a passive income as token holders are able to leverage their parked crypto assets for profits. Analysts at JP Morgan have predicted that the staking industry will grow by at least 400% by 2025. Currently, estimated at $9billion, experts predict the size of the industry to be about 20 billion the next year and $40billion by 2025.
The boost in the Staking industry is expected to come from the launch of Ethereum 2.0 which is scheduled towards the end of 2021. A group of JP Morgan analysts led by Kenneth Worthington have said that in the coming years more and more retail and individual investors would get into cryptocurrency staking.
“We see staking as a growing revenue stream for cryptocurrency intermediaries such as Coinbase and a source of income for retail and commercial owners of cryptocurrencies utilizing the proof-of-stake protocol,” JPMorgan said in the note.
“The opportunities to ‘earn’ will grow meaningfully with the Ethereum merge anticipated for later 2021, which will boost the size of the proof-of-stake ecosystem.”
Staking is a process to secure the Proof of Stake (PoS) blockchains. In typical proof of work (PoW) blockchains, the miners secure the network by validating transactions after they solve complex cryptographic equations. In staking, the token owners stake their tokens to validate a transaction and earn rewards in the process.
What Is Staking
One of the other reasons for the growing popularity of Proof of Stake (PoS) blockchains is that they are more environmentally friendly compared to PoW blockchains. With PoS there is no need to mine tokens and that saves a lot of power.