Ethereum’s post-merge rewards will likely be lowered than initially anticipated as we can see more today in our latest Ethereum news today.
The staking yields on the post-merge Ethereum PoS blockchain will be lower than anticiapted by most of the community. Ethereum’s transition from a PoW to a PoS consensus mechansim or the Merge will not happen in June as most predicted. The ETH core developers will not yet be ready for the merge before the end of the third quarter and the highly anticipated merge will also mark the ETH Transition to Pos and will minimize the energy consumption and make the network even more scarce and quiet profitable to stake in. Staking is also one of the most awaited features of the post-merge ETH network.
Appreciate the reply. Still looking like June for the plug pull or will the mining community have some more time?
— JRock (@TripleSack) April 12, 2022
According to IntoTheBlock, the initial estimates claimed the staking will give users between 12% and 15% in rewards but it seems like this percentage will get far lower after the Merge. However, as per the reports by IntoTheBlock, the conditions changed with the on-chain metrics pointing out much lower staking yields once the merge happens. Ethereum’s post-merge rewards will be lower and as of today, over 11.5 million ETH is staked and locked in the beacon chain with the amount of staked ETH continuing to grow as the stakers anticipate a projected future of the reward with 12-15% rates.
The amount of ETH locked represents 9.5% of the entire circulating supply and according to IntoTheBlock, the growth can be appreciated with the value staked nearing all-time high despite the ETH market price being down by 37% from its ATH in November 2021. The growth of the staked ETH accelerated since the stETH launch which is a staking derivative token used as collateral on the Aave lending protocol but the rise in the staked ETH causes rewards to drop proportionally. In other words, the more ETH staked, the fewer rewards per staked Ether as well.
In a sense, Ether staking is a victim of the success, and with the merge delayed a few months it means that the amount of ETH staked will grow further which resulted in lower yields. According to IntoTheBlock, the amount of ETH staked is one of the main factors affecting the staking rewards after the merge. These three factors are the amount of ETH Gas fees paid by the users with the percentage of fees burnt and the ETH staked. The number of gas fees paid to use ETH dropped as the activity in DEFI and NFTs dried up.
The trading volumes on OpenSea also dropped from a high of $250 million to $70 million on April 14. the trading volumes on the equally popular decentralzied token exchange Uniswap dropped to a lesser extent or by 33% since the weekly high In January compared to last week. Because of the sideways market trend, there has been lower urgency to execute transactions which leads to traders being less willing to pay high fees.
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