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“Shanghai Fork, A New Era Of Staking For Coinbase,” Says JP Morgan

source-logo  coinedition.com 23 January 2023 08:37, UTC

According to analysts at JP Morgan, Coinbase — the crypto exchange — will be looking forward to a favorable future post the newest update. Ethereum’s network is all set to deploy its latest update, the Shanghai Fork, in March.

In a recent Tweet, an online media quotes JP Morgan: “Shanghai Update Could Brighten Outlook for Coinbase.” After Ethereum’s Beacon Chain, the latest update from Ethereum Network is called the Shanghai Fork, which is said to release in March. Shanghai Fork will let people access funds (earlier set aside for Ethereum’s Beacon Chain) to allow depositors to participate in validating transactions and earn newly-created Ethereum as rewards.

As per reports, the analysts had written that staking in Ethereum forced holders to lock up their Ether indefinitely, which was viewed as a big disincentive to stake ETH historically. Analysts at JP Morgan applauded the upcoming Ethereum update stating:

We think the Shanghai Fork could usher in a new era of staking for Coinbase.

The researchers observe that if Coinbase’s users are automatically enrolled as they are with tokens such as Cardano and Solana, staking Ethereum could become a significant windfall.

Approximately 95% of Coinbase’s retail investors could stake Ethereum after the Shanghai Fork, which could generate the exchange $225 million to $545 million in revenue annually, estimates the Investment Banks.

The Shanghai Fork will address the current issue faced by Coinbase users where they are required to opt-in to staking their Ethereum because there’s no way for them to access the deposits or ETH with which they’ve been rewarded.

Among the current crypto turmoil, the additional revenue could bring Coinbase some relief, along with the estimated $50 million annually that the exchange already earns through Ethereum staking.

JP Morgan analysts noted that Coinbases’s potential upside is partly due to its “unusually large” exposure to Ethereum, which accounts for around 25% of the exchanges’ assets.

According to the article, Coinbase has seen growth in staking. In its third fiscal quarter of last year, around 11% of the exchange’s revenue came from staking, which was a rise of 6.2% from a year earlier. Staking is available on Coinbase for Cardano, Solana, Cosmos, Algorand, and Tezos, in addition to Ethereum.