Many people have made large sums of money using crypto in previous years. This article aims to identify the next big trend that will affect the value of both your crypto assets and your hard cash. According to David Lawant, the director of research at Bitwise, the next big thing in crypto is staking. He sees this as a huge opportunity for the industry as a whole.
Some crypto investors have already made a lot of money by staking. They typically earn an annual percentage yield of over 1,000%. Aside from being a huge opportunity for crypto investors, Lawant also believes that staking will have a huge impact on the upcoming Ethereum merger.
What is Staking Crypto?
Staking is a type of investment that occurs when a cryptocurrency is run on a proof-of-work blockchain. Currently, most cryptocurrencies such as Bitcoin and Ether are built on the proof-of-work model, which requires a huge amount of computing power.
Lawant believes that proof-of-stake is the future of crypto. Instead of using complex algorithms to verify transactions, users can stake more coins to get rewarded. This type of investment can also include an annual percentage yield. For instance, once the blockchain supporting Ether migrates to a proof-of-stake model, users who support the platform can earn rewards in return for their support.
Currently, two proof-of-work chains are running on the Ethereum platform. After the merger between the two chains is completed, the platform’s blockchain will be completely dedicated to the proof-of-stake model. This will eliminate the need for mining.
The Beacon chain already allows users to support the network and earn a 5% annual yield. Lawant believes that this will increase significantly after the merger between the two chains. The Ethereum blockchain’s Beacon chain already allows users to support the network and earn a 5% annual yield.
After the merger, some experts are predicting staking rewards to be up to 12% or more. Other blockchains, like Cardano and Solana, are also running on the proof-of-stake. For instance, a person who supports Solana could potentially earn 5.8% annually. Every blockchain has its set of requirements for staking, and they each come with their own set of risks.
Staking is an investment that takes on a high amount of risk. If the cryptocurrency being staked is worthless, the investors’ rewards are worthless. Aside from the high risk, various restrictions come with staking. Some of these include the minimum amount of coins that users need to stake to get rewarded.
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