The Merge is the next big upgrade of the Ethereum protocol. It will replace the current Proof-of-Work (PoW) consensus by Proof-of-Stake (PoS), which will make the network 99.95% more energy-efficient and more decentralized.
When will the Merge be live?
The Merge launch is expected around September 15th, you can check our post about Why nobody can know the exact date of The Merge. With it, new rewards will be available for stakers. There will be 2 types of rewards after the Merge:
Consensus-level rewards, earned through the activity of the validators on the network (submitting attestations and proposing blocks), and locked on the Beacon chain, the consensus-layer post-Merge. Stakers won’t yet be able to withdraw their stake or consensus-layer rewards nor their stake locked on the Beacon chain.
Execution-level rewards (new), earned when the validator proposes a block (currently between 6 and 7 times a year on average). These rewards are composed of a percentage of transaction fees, and tips. The execution level rewards are liquid, which means that they are received on an Ethereum address, usually the one used to stake during the deposit phase. If the validator proposes a block with MEV, those rewards can have a great impact on the total APY.
After the Merge, stakers will earn more rewards and receive part of them as liquid rewards.
In Proof-of-Work Ethereum, the network emits 2 ETH for every block mined. To compensate for this inflation, EIP-1559 introduced a burning mechanism of a part of the transaction fees. The higher the network usage, the more fees were burnt.
After The Merge, the 2 ETH issuance will be removed and the network will start to have an inflation/deflation equilibrium:
If the network has high congestion, the base fee will be higher for transactions and therefore more ETH will be burnt. At certain points, more ETH will be burnt than ETH issued. This will make the supply deflationary.
If the network has low congestion, the base fee will be smaller for transactions and therefore less ETH will be burnt. At certain points, less ETH will be burnt than ETH issued. This will make the supply inflationary.
Evolution of staking rewards
By including both the Consensus-level and Execution-level rewards, the APY of ETH staking can increase up to 7-9%. The increase of the expected APY and the liquidity of Execution-level rewards, will incentivize more stakers to stake their ETH. This may increase the price of ETH as less supply is available on the market, driving the price of ETH up, further incentivizing more staking.
When more validators are running on the network, the chance to propose a block diminishes for a single validator. If there is greater adoption of ETH staking in the future, we can expect consensus level rewards to be lower.
At the time of this post, 10.79% of the total ETH supply is staked. We can expect this number to increase steadily once withdrawals are enabled.
What will happen after the Shanghai upgrade?
The next step after the Merge is the Shanghai upgrade, which should be live by Q1 or Q2 2023 (current projection). This new network upgrade will allow new mechanisms for staker rewards, in particular, the withdrawal of consensus-level rewards.
There will be 2 types of operations:
Unstaking, where the staker will be able to stop their validator on the protocol level and retrieve stake and consensus level rewards.
Skimming, which will enable the staker to only withdraw consensus level rewards on their Ethereum address.
After the Shanghai upgrade, there will no longer be an infinite lock up period for Ethereum stakers, which creates more flexibility for the stakers.
About Kiln
Kiln is the leading enterprise-grade staking platform, enabling institutional customers to stake assets, and to whitelabel staking functionality into their offering. Our platform is API-first and enables fully automated validators, rewards, and data and commission management. With over $2.2b stake under management, Kiln has a particularly strong track record on Ethereum as we run about 3% of the network; this includes 22,000+ validators with 0 slashing events.
Percentage rates for your staked ETH are currently estimated between 3% and 6% annually (APR). These rewards will continue after The Merge. After The Merge, Kraken
Kraken
Kraken Wallet is a powerful, self-custody wallet built to connect you to the decentralized web — safely and securely. Store and manage all of your crypto, NFTs, and multiple wallets in one place.
The total reward rate for staking ETH currently ranges from 4.1% ~ 4.8% and is sourced as a result of block proposal rewards. Validators receive block proposal rewards for successfully appending a new block to the chain.
The Merge and Dencun increase the supply of Ethereum
This transition not only marked a significant reduction in the network's energy consumption of over 99%, but also introduced a new mechanism for managing transaction fees and creating new ETH.
After The Merge takes place, Ethereum's ether token will still retain the ETH ticker symbol on Kraken. ETH holders and stakers will still be able to find their tokens under the ETH symbol. If the previously mentioned miner hard fork is successfully implemented, it's likely a new Ethereum-like coin will be created.
The current estimated reward rate of Ethereum is 2.14%. This means that, on average, stakers of Ethereum are earning about 2.14% if they hold an asset for 365 days. 24 hours ago the reward rate for Ethereum was 2.11%. 30 days ago, the reward rate for Ethereum was 2.05%.
After the news of The Merge's completion, the coin price went up, meaning that on 15 September it was trading at around $1,640. In the 24 hours after that, though, the price dropped sharply, and on 16 September 2022, it was worth about $1,450.
Estimated rewards rate: Rewards rates vary - visit https://www.stakingrewards.com/cryptoassets* for current estimated reward rates. Estimated reward payout: Era | Validator rewards are distributed every 4 - 5 days after the activation period is complete.
While many cryptocurrencies pay out staking rewards in a network's original coins or tokens, other blockchains have created their own or separate coins and tokens which are utilised as staking rewards, as well as for the blockchain's internal operations.
In 2022, Ethereum underwent one of its biggest transformations: the transition from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism. Labeled Ethereum 2.0, the upgrade was accomplished by merging with Beacon Chain, a PoS-based blockchain.
Proof-of-Stake (POS) uses randomly selected validators to confirm transactions and create new blocks. Proof-of-Work (POW) uses a competitive validation method to confirm transactions and add new blocks to the blockchain.
Ethereum 2.0 can process 100,000 transactions per second (TPS): The only thing the Merge changed about transaction speed is that the average block time drops to 12 seconds from 13–14 seconds.
Is it profitable to invest in ETH 2.0? Over the last 30 days, ETH 2.0 had 30/30 (100%) green days. According to our historical data, it is currently profitable to invest in ETH 2.0. The price of ETH 2.0 decreased by -0.39% in the last 1 year.
Ethereum staking rewards currently average around 4-7% annually but can fluctuate depending on network activity. Here are some estimates: Staking 32 ETH (1 validator) – ~4-7% SRR = 1.6 – 2.24 ETH per year. Staking 1,000 ETH – ~4-7% SRR = 160 – 224 ETH per year.
Clearly, staking Ethereum is a great way to earn some passive income on the side of your crypto investments. It's relatively low-risk and easy, but your yields (results) can vary quite a lot, depending on what kind of staking strategy you use.
Address: Apt. 203 613 Huels Gateway, Ralphtown, LA 40204
Phone: +2135150832870
Job: Regional Design Producer
Hobby: Nordic skating, Lacemaking, Mountain biking, Rowing, Gardening, Water sports, role-playing games
Introduction: My name is Fredrick Kertzmann, I am a gleaming, encouraging, inexpensive, thankful, tender, quaint, precious person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
