It seems like so much has transpired in the latest blockchain news and the Ethereum ecosystem in particular since last week. It was only about a week ago, on Thursday, September 15, that the second-leading digital asset and blockchain completed its live network merge, which upgraded Ethereum to a Proof-of-Stake (PoS) consensus mechanism, made possible by the implementation of its Beacon Chain.
The merge refers to the completed union of the underlying Ethereum Virtual Machine (EVM) operational blockchain, with the Beacon Chain consensus and staking layer, that was released in December 2020. It was then that Coinbase, a publicly traded company, began to occupy nodes on the emerging blockchain made available by Ethereum. The question began to pop up – would institutional investors be drawn to the opportunity despite the liquidity issues which have kept many away?
Staking Made Live On Ethereum
The introduction of the Beacon Chain in 2020 opened the doors for staking to become live on the Ethereum network. It was started almost two years prior to the completion of the merge which just finished, albeit there is a phase which is still being developed. The next phase of development will reportedly introduce shard chains to Ethereum, in an effort to scale speed, efficiency and processing power inherent within its native blockchain.
Since the merge was completed, staking has become an even more hot Ethereum crypto news topic, as the switch from Proof-of-Work (PoW) meant where miners used to be the network participants who facilitated consensus, now individuals who stake at least 32 ETH would occupy the role of being Ethereum network validators. The question of whether this was the time for more institutional investors to consider participating in the cryptocurrency market through the heavily implemented practice of staking was consistently raised, and being considered now, perhaps more than ever before.
Why Staking Could Be A Possible Entry For Institutional Investors
Staking is used in more than half of the blockchain projects today according to the most recent information published by trusted data sources. One of the most consistently discussed topics over the recent years in the greater cryptocurrency space has been how to encourage the inclusion of institutional investors to the market. According to some experts, Ethereum staking may help in that pursuit.
The biggest concerns that have seemed to keep institutional investors away from investing in the cryptocurrency market have been regulatory uncertainties and significantly lesser liquidity available within the total cryptocurrency market sector. Traditionally institutional investors seek stability, security and consistency when considering investment strategies. While cryptocurrencies have been evolving since their introduction to the public, foremost with Bitcoin in 2009, not until now have regulatory issues been addressed and other concerns considered. This is significant for institutional investors, and as more clarity is established, more institutional investors very well could be encouraged to invest into the space.
Navigating The Future One Step At A Time
While the Ethereum merge has opened staking positions to global participants, it should be noted that occupying the network as a validator could be quite favorable and something institutional investors should at least consider. This is true especially if Ethereum emerges as one of the ecosystems leveraged and trusted to assist in building the future which many envision DeFi will greatly influence some day.