Kenneth Worthington, an analyst at JPMorgan, believes Coinbase will be a “significant beneficiary“of the highly anticipated Ethereum blockchain (ETH) upgrade, scheduled for September 19.
The analyst says the crypto-currency exchange has recently taken real initiatives “To maximize the value of staking Eth for its customers“, which Worthington said should result in better revenue generation for Coinbase itself, according to an Aug. 17 StreetInsider report.
“We see the staking revenue opportunity greater (proportionately) than the revenue opportunity given that we expect institutional staking customers to contribute significantly to Eth staking revenue, but much less for institutional customers. The vast majority of the economy remains with individuals,” Worthington said in a client note.
Notably, as the merge approached, the total amount of its native ETH token staked recorded a new all-time high, nearly doubling over the previous year despite a 43 percent drop in price over the same period.
Coinbase holds a 15% market share for ETH.
The Ethereum merger is widely regarded as one of the most important milestones in the long and eventful history of crypto-currencies. By some estimates, Coinbase has a 15% market share for ETH assets.
“We estimate Coinbase’s incremental annual staking revenue from the Ethereum merger to be $650 million based on 2,000Eth and a 5% Eth yield. We see an additional $80 million to $100 million in annual staking revenue,” Worthington added.
“Coinbase is larger in [éther] than was intuitive to us, which leads directly to a greater revenue opportunity “, the bank wrote. JPMorgan also gave Coinbase shares a neutral rating and a $64 price target.
While retail customers may “circulate more in the more speculative tokens“According to Worthington, Coinbase’s market share is clearly skewed toward institutions that are more likely to buy ETH and Bitcoin (BTC).
Finally, according to the analyst, in addition to Coinbase, FTX, Gemini and Binance should all benefit from the merge.