- Bitstamp’s CEO has been “blown away” by the amount of interest in ether staking, he told Insider.
- Bitstamp is one of many exchanges to have added ether staking, amid excitement around ethereum 2.0.
- Staking is when users put up tokens to gain the right to validate transactions and earn more crypto.
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The CEO of crypto exchange Bitstamp has been “blown away” by the amount of interest in ether staking on the platform, as excitement builds around a sector that JPMorgan believes could be worth $US40 ($AU54) billion in five years’ time.
Crypto staking is when users put up their own tokens to gain the right to validate transactions on blockchain networks and earn more cryptocurrency as a reward.
Bitstamp added ethereum staking to its offering in July. The exchange was started in 2011 and is the 11th-biggest.
“We have been … blown away, if that’s the right term, in terms of the amount of interest that has come,” Bitstamp CEO Julian Sawyer told Insider this week. He did not disclose how much had been staked so far, however.
Sawyer said Bitstamp users who were choosing to stake ether – the cryptocurrency of the ethereum network – were on average staking 50% of their holdings.
“That says a lot. That is not people playing [and saying] ‘oh, I’ll just put 1%, 10% over there, I’ll put a hundred dollars into this.’ That is people being engaged in the product set and the interest rate.”
Excitement has built around staking thanks in large part to the ethereum network’s upcoming upgrade, known as the shift to ethereum 2.0.
The network will move from a “proof-of-work” system, where so-called miners use vast amounts of computing power to validate transactions, to a “proof-of-stake” mechanism. Developers hope the switch will be complete by early 2022.
The upgrades could help the staking industry grow to $US40 ($AU54) billion by 2025, JPMorgan analysts, led by Kenneth Worthington, said in early July. Worthington and colleagues said exchanges such as Coinbase stand to profit as the sector grows.
More than 6.4 million ether – worth $US15.1 ($AU21) billion on Friday – have been staked on ethereum 2.0 network already, according to Etherscan.
However, users who want to stake ether, including on exchanges such as Bitstamp and Coinbase, have to lock up their coins until the upgrade is complete. Ether staking is also unavailable to Bitstamp’s US customers.
Sawyer said the fact that users were willing to lock up their tokens showed how people are increasingly committed to the crypto sector.
The Bitstamp boss, who has run the company since October 2020, also said interest in ether has grown sharply compared with interest in bitcoin. He said this shows people are becoming more interested in other parts of the crypto world.
Although many retail investors are interested in ether staking, one executive at a top crypto exchange said institutional investors were warier due to the lock-up period, during which time the price could swing wildly.