{"id":326962,"date":"2021-08-18T12:57:00","date_gmt":"2021-08-18T09:57:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/staking-will-eat-blockchain-for-breakfast-heres-why\/"},"modified":"2021-08-18T12:57:00","modified_gmt":"2021-08-18T09:57:00","slug":"staking-will-eat-blockchain-for-breakfast-heres-why","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/staking-will-eat-blockchain-for-breakfast-heres-why\/","title":{"rendered":"# Staking will eat blockchain for breakfast \u2014 Here\u2019s why"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a25e7c5bf324\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a25e7c5bf324\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/staking-will-eat-blockchain-for-breakfast-heres-why\/#PoW_proves_vulnerable_to_mining_clampdowns\" >PoW proves vulnerable to mining clampdowns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/staking-will-eat-blockchain-for-breakfast-heres-why\/#The_climate_controversy\" >The climate controversy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/staking-will-eat-blockchain-for-breakfast-heres-why\/#PoS_%E2%80%94_a_model_for_the_future\" >PoS \u2014 a model for the future<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Staking will eat blockchain for breakfast \u2014 Here\u2019s why <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvYmRmMTNiMGUtMjI4Zi00NTRhLTlmNTEtM2FmMDE3NTM1OGM4LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>In early July, JPMorgan released a report in which two of the bank\u2019s analysts projected that the staking industry would be worth $40 billion in rewards by 2025. The report anticipates that once the Ethereum 2.0 network completes its transition from proof-of-work (PoW) to proof-of-stake (PoS,) payouts will more than double, up to $20 million from the current $9 million. Within the next four years, it will double again.<\/p>\n<p>With the rapid rise of staking over the last few years, it\u2019s hardly surprising that traditional finance analysts are starting to take note. While the JPMorgan analysts are correct that the market will continue to grow, however, even $40 billion could be a conservative estimate.<\/p>\n<p>If that seems ambitious, then consider how quickly the current market for staking has accelerated over the last few years. Of the top six staking platforms, only Cosmos and Algorand launched staking before 2020. The other four \u2014 Cardano, Ethereum 2.0, Solana and Polkadot \u2014 only went live with their variation of PoS over the last fifteen months or so. Furthermore, those platforms now <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.stakingrewards.com\/cryptoassets\">account<\/a> for around half of the total staked value.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>\u200b\u200bThe staking race: Late entrant Ethereum lags behind rivals with Eth2<\/em><\/strong><\/p>\n<p>In the wake of this dramatic growth, venture capital (VC) investment is pouring into the crypto space. As one of crypto\u2019s proven growth segments, decentralized finance (DeFi) is currently attracting the kind of investment that is making mainstream headlines. The Financial Times <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/0f179c8d-aa60-41d4-96d7-5d53e78c3514\">reports<\/a> that private investors have already backed 72 DeFi companies this year, outpacing 2020 even before the year is halfway through.<\/p>\n<p>The vast majority of these DeFi <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>s are based on PoS platforms, indicating that we can see traffic levels on those networks increase exponentially over the coming months and years. More traffic means more fees which means more generous rewards for validators and stakers, making staking a no-brainer for generating passive income.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"PoW_proves_vulnerable_to_mining_clampdowns\"><\/span>PoW proves vulnerable to mining clampdowns<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The reasons why projects are turning to PoS hardly need revisiting. Ethereum\u2019s scalability problems under PoW are well-documented and much-discussed. PoS offers the opportunity for faster throughput and lower fees. However, recent events underscore more than ever why PoW is no longer fit for purpose.<\/p>\n<p>As the Chinese authorities have taken Draconian steps to outlaw cryptocurrencies, miners have staged a mass exodus to avoid falling foul to the law. Some have migrated across international boundaries and some have dumped their mining equipment on the market, resulting in Bitmain halting shipping of its newest models.<\/p>\n<p>It\u2019s to Bitcoin\u2019s (BTC) credit that the price has held as well as it has, indicating the resilience and maturity of the crypto markets.<\/p>\n<p>However, the events in China have underscored that PoW is vulnerable to the kind of censorship that blockchain aims to resist. Bitcoin\u2019s power consumption proved to be its biggest weakness over recent weeks, and it\u2019s a scenario that could repeat in any other country where PoW miners choose to exploit low-cost electricity.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_climate_controversy\"><\/span>The climate controversy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Bitcoin\u2019s energy consumption also has another Achilles Heel, and one that\u2019s been hotly debated this year \u2014 its effects on climate change. While renewables offer one workaround, PoS offers a far more attractive workaround \u2014 eliminating energy consumption dependency altogether.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>No, Musk, don\u2019t blame Bitcoin for dirty energy \u2014 The problem lies deeper<\/em><\/strong><\/p>\n<p>Many environmental advocates invoke the analogy of coal-guzzling power plants to illustrate the dangers of PoW. Taking this analogy a step further, PoW can be considered as the engine that drove crypto through its \u201cIndustrial Revolution\u201d phase. For the digital era, however, we need a more sustainable and resilient engine that can reach cruise speeds for long into the future without losing power or causing unknown collateral damage along the way.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"PoS_%E2%80%94_a_model_for_the_future\"><\/span>PoS \u2014 a model for the future<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>None of this is a criticism of Bitcoin or PoW, both of which have proven their ability to last the distance. Bitcoin\u2019s resilience means it will be around long into the future. However, new platforms and projects are self-evidently shunning PoW in favor of PoS. Therefore, it seems inevitable that many PoW platforms will simply fade out through lack of use over time.<\/p>\n<p>Ultimately, for the blockchain sector, this is a good thing. Aside from the endless accusations of environmental destruction, a shift to PoS will ensure that the ecosystem is more resilient against external forces. Furthermore, by eliminating the need for expensive mining equipment, PoS makes joining a blockchain network as a validator more democratic and removes barriers to entry. Making staking more attractive improves the likelihood of validators joining the network, increasing security.<\/p>\n<p>As the returns available in the traditional financial markets diminish over the coming years, and while governments seek to recoup the debts they incurred over the last year or two, staking will become an increasingly attractive prospect for investors. For those of us who\u2019ve watched the inexorable rise of staking over the last year or two, the only question is: Does the JPMorgan prediction go far enough?<\/p>\n<p class=\"post-content__disclaimer\"><em>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/em><\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Tushar Aggarwal<\/strong>, an early member of the LuneX Ventures, is the founder and CEO of Persistence, an ecosystem of bleeding-edge financial applications focusing on both institutional and crypto-native users. Tushar is listed in Forbes 30 under 30 Asia.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"consulting_newsletter\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/staking-will-eat-blockchain-for-breakfast-here-s-why\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Staking will eat blockchain for breakfast \u2014 Here\u2019s why &#8221; In early July, JPMorgan released a report in which two of the bank\u2019s analysts projected that the staking industry would be worth $40 billion in rewards by 2025. The report anticipates that once the Ethereum 2.0 network completes its transition from proof-of-work (PoW) to&#8230;<\/p>\n","protected":false},"author":1,"featured_media":326963,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvYmRmMTNiMGUtMjI4Zi00NTRhLTlmNTEtM2FmMDE3NTM1OGM4LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,78717,74876,75578,76751,4965],"class_list":["post-326962","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-energy-consumption","tag-proof-of-stake","tag-proof-of-work","tag-sustainability","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/326962","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=326962"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/326962\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/326963"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=326962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=326962"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=326962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}