- According to Adam Cochran, Ethereum 2.0 will attract large investments from institutions and retail investors due to the attractiveness of the staking rewards.
- The high demand for Ethereum will trigger a supply shock that will drive up the ETH price.
Analyst and former marketing director of Dogecoin, Adam Cochran, published an article on the potential of Ethereum 2.0., arguing that Ethereum 2.0 will be the engine of unprecedented “economic change” once it is launched.
As CNF reports, Ethereum is currently in a transition phase to move its consensus algorithm from the proof of work to the proof of stake. A few days ago, the “Topaz” testnet was launched which will be active for about 3 months and is supposed to be the last big milestone (besides a multi-client testnet) before the ETH2 launch. Topaz is using the same configuration that the Ethereum 2.0 Mainnet will probably have when it is launched. If the results of the network test are positive, Phase 0 is expected to be released on July 30th, although the date is currently pending.
Ethereum will suffer a supply shock due to high demand
Cochran claims in his article that the start of phase 0 will be the catalyst for the “next economic change”. According to him, there are 7 reasons that will drive this change. One is that large investors will be attracted by the benefits of staking as the rewards are stable and will have a profit margin of 3% to 5%.
To reach this level, Cochran says, the validators will have to invest between 10 and 30 million ETH. However, Cochran considers it unlikely that this will be the case in the early phase of Ethereum 2.0. As Vitalik Buterin recently explained, the rewards could be even higher if the participation in the initial phase is rather low and interest rates will be even higher as a result. Regarding this, Cochran said:
(…) roughly 10% — 30% of all circulating Ethereum would need to be locked up before the network is below the return rate that is targeted by large rent…