JPMorgan’s prominent investment bank believes that Coinbase will benefit from the Merge. Kenneth Worthington, an analyst at JPMorgan, stated that Coinbase’s San Francisco-based crypto exchange had taken concrete steps to increase the value of ETH staking to its clients in a Wednesday note.
This is expected to lead to higher revenue generation. Worthington claimed ,
” We see the staking income opportunity as greater than the income opportunity. Institutional staking customers will be able to contribute meaningfully to Eth Staking Revenue, but less for Institutional customers. The majority of the economics remain with retail ,”
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High Hopes For Coinbase
Coinbase failed to sustain momentum in the midst of market volatility last year. As per its second-quarter earnings, the exchange registered a loss of $1.1 billion on revenue of $803 million. Both figures were below analyst expectations. Its revenue declined by almost 64% as investors exited the crypto market after last year’s dramatic run.
But, the Merge, scheduled for mid September, could prove to be significant for the exchange. Currently, the company holds a 15% market share of Ethereum assets. The New York-based investment bank claims that this will give Coinbase an advantage in this market. Coinbase’s new institutional-focused staking product, and its CEO, Brian Armstrong, said he expects this will benefit its business model.
In short, Coinbase’s Ethereum holdings as well as its staking service to institutions are expected boost its financials.
As per Worthington’s estimates, the exchange can potentially generate incremental annual staking revenue from the Ethereum Merge of $650 million with Ether’s price at $2,000 and a 5% ETH yield. “We see an incremental annual income of $80-$100mn of staking income,” Worthington added.
“We estimate Coinbase incremental annual staking revenue from the Ethereum merge of $650mn based on $2,000Eth and a 5% Eth yield. We see an incremental annual income of $80-$100mn of staking income.”
Institutional Staking: A “Phenomenon”
Coinbase’s chief financial officer Alesia Haas recently vouched that the Institutional staking of cryptocurrencies, including the post-Merge Ethereum, could potentially become a “phenomenon” in the future. However, Alesia Haas, Coinbase’s chief financial officer, stated that it was still early days for their new cryptocurrencies staking service.
Any “real material impact” of Ethereum can only be seen after the liquid staking option has been created for post-Merge Ethereum.
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