The ETH Gold Rush | Why People Are Rushing to Buy in Anticipation of Ethereum 2.0

The fundamental ideas of ETH 2.0 have been talked about for years. There have been delays, debates and development happening around these ideas but many people still wonder what will actually happen as the 3 phases of ETH 2.0 begin to roll out.

In April 2020, the initial testnet was launched which allows people to play around with the proof of stake feature and see how much they can earn with staked ETH.

It’s hard to say what the actual staking rewards will be when ETH 2.0 actually launches, but a commonly estimated rate is somewhere between 4% and 10% APY.

Eligible Addresses on the Rise

In order to stake ETH and earn block validator rewards, you need to have 32 ETH in your wallet. The number of wallets that have 32 ETH or more has been steadily rising in anticipation of PoS (Proof of Stake).

Source: Arcane Research

Of course, it’s important to note that not every single wallet constitutes an individual person. Many individuals who hold this much ETH likely have other wallets that are also eligible, so a 1:1 human to wallet relationship doesn’t exist.

If you take note of the buying and storing activities happening in ETH wallets, you’ll notice that people are actually buying and hoarding ETH in anticipation of 2.0. This makes me excited about ETH for a lot of reasons — even if many of these people are just speculating on other people buying ETH once 2.0 launches, there is still going to be a lot of ETH getting staked (which means that ETH is getting locked).

Less ETH flowing to the market means a tighter supply. If demand stays the same (and many expect that demand will actually increase with the 2.0 launch), then we can speculate on ETH rising in price.

Making ETH an Attractive Investment

ETH has always been an attractive investment to me, but we have to remember that there are entire categories of investors who wouldn’t touch it with a 10-foot pole.

Like most things in crypto, ETH is extremely volatile and as of right now there isn’t a built-in feature for earning a yield on your investment. Yes, you can use things like MakerDAO CDP Vaults (this is one of the things I currently do with my ETH) to help generate a yield, but these systems aren’t exactly “built-in” to the protocol.

The viewpoint of many investors is that they want to buy something like ETH, stake it and earn a passive yield on it. They don’t want to play around with something like MakerDAO in order to try and earn a yield.

Many people in the space are now talking about how ETH will become a highly attractive investment to the more “button-up investor” types out there. Rather than just buy ETH to spectate, people may begin to view ETH as more of a store of value and will also be attracted to that 4-10% APY.

From a personal standpoint, I’m excited about ETH 2.0 and staking. I’ve invested in ETH over the past few years for a lot of different reasons, but mostly out of speculation on future price. The ability to stake ETH and earn an APY without having to use a “third-party” system like MakerDAO will be an interesting use case.

Yield is one of my favorite things in the world and I typically won’t invest in anything that doesn’t give off some sort of yield. STEEM HIVE is a great example of a crypto that I was attracted to because of the ability to stake and earn a yield.

Addressing the Greatest Threat to Ethereum

I wanted to keep this article focused on staking and yield, but I feel like I should address this question as it is one of the most debated ideas that I’ve heard when it comes to investing in ETH.

”Ethereum isn’t scalable. An Ethereum killer will take over.”

There are a lot of ways to combat that statement, but since we’re talking about ETH 2.0 we can focus on the fact that the Ethereum chain is going to become far more scalable, efficient and decentralized with the addition of Proof of Stake.

In short, I'm not worried about scalability and never have been. We're in the early stages of this technology and whether you're looking at ETH or BTC, scalability - like usability - is something that needs to be developed over time.

This is all just my opinion, DYOR and don’t take this as investment advice. What I’m personally doing is BTFD’s on ETH and storing it away in anticipation of staking and this “ETH gold rush”. I just bought a few more ETH today and will continue to buy leading up to the launch of 2.0.

Posted Using LeoFinance