The adoption of Proof-of-Stake (PoS) consensus models and staking has surged over the course of the last year and with Ethereum’s upcoming switch to PoS, the trend will likely continue.
According to a recent report published by Binance Research, around $6.4 billion worth of crypto is currently being staked out of a possible total market cap of $11.2 billion, as of October 24*. This number has seen a notable increase as the barriers for staking continue to be lowered with the launch of easily-accessible products, like on-platform staking offered by several exchanges including Binance and KuCoin.
Staking currently only represents around 5% of the total crypto market. However, Binance believes that the launch of Ethereum 2.0, which brings a new PoS consensus model that will offer roughly 4% in annual returns to investors who hold at least 32 ETH, will further increase staking’s market share.
“As the infrastructure matures for receiving staking-related rewards and participating in DeFi, blockchain users will have more options at their fingertips to choose the products that best fit their needs,” states Binance Research in the report. “With Ethereum slated to switch to Proof-of-Stake in the not-too-distant future, the blockchain space may be forced to reckon with staking sooner, rather than later.”
The switch to Proof-of-Stake appears to be coming at a good time, as Ethereum-based decentralized finance adoption continues to grow. The total dollar value locked in DeFi apps is up nearly 170% this year with $546.88 million now in these applications, suggesting users are amenable to the concept of earning rewards for holding Ethereum.
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*Note: After last weekend’s rally, the market cap of PoS cryptocurrencies currently sits at $12.83 billion with $7 billion currently staked, according to StakingRewards.com.
Image: Cryptocurrency360.com / Flickr
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.