The rise of Ethereum (ETH) as a formidable digital asset has caught the attention of financial experts, including Real Vision CEO, Raoul Pal. A notorious Ethereum bull, Pal believes that the platform’s latest updates could pave the way for a substantial surge in value.
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Ethereum’s Staking Yield: A Hidden Gem
During an insightful conversation with Jeff Doman, Chief Investment Officer of Digital Asset Hedge Fund, Pal emphasized the significance of Ethereum’s staking yield, a utility often overlooked by many investors. Following the Ethereum merge, the platform now offers a yield on staked Ethereum, presenting an opportunity for holders to earn a percentage of their holdings over time.
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This unique feature essentially creates a money market curve for the cryptocurrency, providing a compelling incentive for individuals to retain their Ethereum and earn a yield. Currently, the staking return on Ethereum ranges between four to 7%, making it an attractive proposition for investors.
ETH Value Surge Soon?
Combining the staking mechanism with Ethereum’s shrinking supply, thanks to its burn mechanism and reduced supply issuance, sets the stage for a potential upswing in Ethereum’s value. Pal’s bullish outlook rests on four main reasons to hold ETH: as collateral for trading futures or options, for decentralized finance (DeFi) applications, as a wallet for gas, and as a passive investment. The introduction of staking now allows passive holders of ETH to earn a yield on their investment.
Ethereum’s Stake Rate: A Potential Game-Changer
Pal draws a comparison between Ethereum’s staking yield and the passive yield of earning nothing versus earning something. Based on this analogy, he believes that Ethereum’s stake rate could experience a significant rise in the coming years, effectively becoming the risk-free rate in the crypto market.
Ethereum: Future Outlook
In their conversation, Pal and Doman also discussed the potential future of Ethereum as a financial market. They highlighted the opportunities for rate arbitrage, duration mismatches, and structured products.
With the rapid growth of DeFi, stablecoins, and NFTs in recent years, they envision these financial instruments becoming staple offerings within the digital assets industry in the next few years.