The coming “Merge” is arguably the biggest thing to happen to Ethereum in its existence. For investors, it promises to be even bigger.
We’ve already talked about the potential for the token’s price to skyrocket thanks to its new, more efficient validation method.
But the Merge will open up an entirely new way of making money on Ethereum because, as of September, it will be possible to beef up your ETH returns by staking it.
Ethereum is leaving behind proof-of-work, where miners earn rewards for securing the network, for proof-of-stake. In proof-of-stake “validators” lock up a certain amount of crypto and secure the network in the process.
And, as I hinted at a moment ago, it’ll be possible for regular ETH investors to stake their crypto for a reward payout.
Generating income from crypto you already own isn’t as easy as it was as recently as a few months ago. Thanks to the collapse of the TerraLuna ecosystem and the bankruptcies of interest-paying firms like Celsius and Voyager, many crypto investors have turned away from Defi, or decentralized finance.
Staking, on the other hand, carries much less risk. The main limitation is that only proof-of-stake cryptocurrencies offer it. And only about half of the top cryptos have some form of staking.
So, the ability to stake Ethereum, the No. 2 cryptocurrency, represents a major new opportunity for crypto investors. The current rewards are between 4% and 5%, depending on how you go about it.
Admittedly, that’s not eye-popping, but it’s a decent return, handily beating what a legacy bank or the S&P 500 will give you right now. (The actual rates will be determined by the total amount of ETH staked, and so could therefore rise or fall over time.)But there are several things you need to know before you take the leap.