Can ETH/USD rally on Ethereum 2.0 staking launch?
|- Staking will attract large investors seeking to earn a higher RoI on the funds locked in the network.
- FOMO and increased demand for network gas will be the key factors in driving ETH/USD higher.
Ethereum network developers are gearing up for the release of the initial phase of Ethereum 2.0; a new protocol that is set to introduce features such as sharding and execute on the Proof of Stake (PoS) consensus algorithm. Various experts and crypto analysts say that the first phase, which will include staking is likely to lead to a rally as well revolutionize finance. In a blog post, Adam Cochran, a partner at MetaVartel Venture DAO shares several reasons why the phase will bring the next economic shift.
When ETH switches to staking, large investors will likely pour money into the lock-up until we hit somewhere in that 3% — 5% range (we likely won’t go below that as the network still has some tech risk not seen in traditional markets and so rent-seekers will want a slightly higher gain to take the risk) in order to push down to that level, it means locking up somewhere between 10M — 30M+ Ethereum in ETH 2.0 validators.
With rent-seekers in place and accruing higher returns in terms of return on investment (RoI), the following buying rounds will result in higher returns. However, as the rounds increase, the RoI will even out and settle between 3% - %5. In addition to that, a retail FOMO will follow suit as the price starts to increase. FOMO is usually created by investors, mainly retail who join the price action in progress and sale somewhere in the down-swing.
However, continued price rally will depend on the actual demand which is created by the network's ability to support development. This will see “ETH drastically increase its tx/s and therefore its commercial and consumer viability. Gas clogs, high transaction costs, long wait times in dApps all go away, even in a busy market.”
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