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How high could ETH staking rewards get, post-Merge?

By Daniela Ešnerová

12:44, 12 September 2022

Ethereum (ETH) and The Merge logos
Rewards for ETH staking are widely expected to go up post-Merge – Photo: Shutterstock

The most-anticipated event in Ethereum’s history, The Merge, comes with many promises. 

Many will undoubtedly be happy that Ethereum’s switch from proof-of-work (PoW) to a less demanding proof-of-stake (PoS) consensus mechanism will drastically lower the network’s energy consumption – potentially by more than 99%

The Merge is also good news for ETH validators, who keep the network secure by staking their coins, as rewards for their service are widely expected to go up after the upgrade. So how high could ETH staking yields get after The Merge?

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Switch from miners to validators

After the PoW to PoS switch, validators rather than miners will be in charge of verifying transactions on the Ethereum network. ETH holders validate the network by staking their coins. In return, the validators earn yields on their staked ETH holdings. 

The Annual Percentage Rate (APR) is a key metric measuring these staking rewards, and shows how much can validators earn in a year on their staked holdings. The APR for ETH solo stakers is currently 4.1%, according to the Ethereum website.

PEPE/USD

0.00 Price
+0.920% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 0.00000013

ETH/USD

3,914.77 Price
+2.230% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 1.75

BTC/USD

100,855.00 Price
-0.770% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 50.00

DOGE/USD

0.42 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 0.0020857

This rate is expected to increase after The Merge, once Ethereum’s switch to PoS is finalised. But analysts’ estimates of how high the APR could rise differ. 

Yields post-The Merge

Tom Dunleavy, senior analyst at Messari, calculated that APR could grow to from 6.8% in a ‘very conservative’ scenario to a 13.7% ‘very aggressive’ scenario.

Lucas Outumuro, head of research at IntoTheBlock, concluded that – based on data from the last 30, 90 and 180 days – staking yields will range between 5.8% and 6.9% following The Merge.

Another pseudonymous analyst, writing under the name Pintail, calculated that medium rewards will be “6.1% APR, with a lower quartile of 5.3% and an upper quartile of 7.3%.”

Markets in this article

ETH/USD
Ethereum / USD
3914.77 USD
85.57 +2.230%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
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