A new report from U.S. bank JPMorgan Chase (JPM) says that Ethereum (ETH) has become more centralized and that its overall staking yield has fallen since the cryptocurrency upgraded to more energy-efficient operating protocols.
The report claims that the two major upgrades to Ethereum over the last year, known as “the Merge” and the “Shanghai Upgrade,” has come at a cost to the Ethereum network.
While the upgrades managed to cut the amount of energy needed to mine for Ethereum by more than 90%, the upgrades have also had unintended consequences for the second largest cryptocurrency by market capitalization.
JPMorgan concludes that centralization poses risks to the Ethereum network, because a “concentrated number of liquidity providers or node operators could act as a single point of failure or become targets for attacks…”
Many analysts and crypto enthusiasts expected Ethereum to overtake Bitcoin as the largest cryptocurrency after its upgrades, but that hasn’t happened.
JPMorgan’s report says that the increase in staking has also reduced the appeal of Ethereum from a “yield perspective,” especially given the rising yields in traditional financial assets such as bonds.
Ethereum’s total staking yield has declined from 7.3% before the Shanghai Upgrade earlier this year to about 5.5% today.
The price of Ethereum has increased 36% this year to $1,635 U.S.
