By James Davis
While holders of staked Ethereum look forward to the network’s next upgrade, Coinbase, a crypto exchange, could also benefit from that update, according to JP Morgan’s analysts. The Ethereum network’s next upgrade, ‘Shanghai Fork,’ is set to happen in March this year.
After the upgrade, staked ETH holders will be able to unstake their holdings on Ethereum’s Beacon Chain. This chain lets depositors be involved in validating transactions and get rewarded with newly-created Ethereum in return.
JP Morgan Analysts Expect Shanghai Fork to Encourage Ethereum Staking
Currently, staking in Ethereum Beacon Chain locks up one’s ETH indefinitely. For this reason, many have been discouraged from staking their ETH. However, JP Morgan analysts believe that Shanghai Fork could attract new stakers, which is good for Coinbase.
JP Morgan, an investment bank, claims that over 90% of investors on Coinbase are likely to be interested in staking Ethereum if Shanghai Fork is implemented. With more stakers, Coinbase could generate yearly revenue of up to $540 million.
Additional Revenue Could Help Coinbase Solve Its Financial Problems
The investment bank says that currently, Ethereum staking brings the crypto exchange roughly $55 million per year. Therefore the extra revenue could help Coinbase strengthen its financial position amid the ongoing crypto bear market.
Coinbase is among the many crypto firms affected by crypto winter. A few days ago, the exchange revealed that it’s winding up its Japan operations. Moreover, last year, Coinbase sent home over 1,000 employees and also laid off 940 workers at the start of this year.
The exchange’s stock price has also plunged massively. According to TradingView, the stock price has fallen from $191.46 to $55.13 per share in just a year, representing a 69% drop. However, the ongoing rally in the crypto space has boosted Coinbase shares by over 60% in the past three weeks.
Staking has contributed massively to growing Coinbase revenue. In 2022, about 12% of the generated revenue in the third quarter came from staking. Apart from Ethereum, the exchange offers staking for Solana, Tezos, Cosmos, Cardano, and Algorand.
JP Morgan notes that due to Coinbase’s significant exposure to Ethereum, the exchange stands to benefit considerably from Shanghai Fork. ETH accounts for about 25% of the digital assets on Coinbase.