It is however noteworthy to state that most crypto assets have since recovered from the March market carnage. However, Bitcoin’s 140% gain above its March bottom is still an underperformance, to take for instance Cardano (ADA) huge 600% gains above its March lows.
While Bitcoin has been trading sideways since, after the May halving, Cardano (ADA) has rallied nearly 60% since the beginning of June. Kyber Network (KNC) also gained nearly 200% since the end of March, setting a two year high in the process.
What is behind the insanely bull run of these Altcoins? Crypto research and data firm Messari gives a clue in a recently released data.
Data aggregator, Messari states that the propelling factor in a larger chunk of the Altcoin market currently and in the previous year is Staking.
Messari sees Staking as the likely reason behind the huge price jumps in Cardano, 0x, Kyber Network, and others.
While most traders and investors deem these crypto-assets’ rally as being by chance and sheer opportunity created by market factors, Messari points to one singular reason for this recent price activity-Staking.
Bearing in mind that all blockchains have a thing in common: transactions need to get validated. Bitcoin for instance does through mining which is Proof-of-Work. But there are also other forms of validation often referred to as the consensus mechanism. Proof-of-Stake (PoS) is one such consensus mechanism that works through Staking. Coin Staking gives currency holders some decision power on the network.
By Staking coins, you gain the ability to vote and generate an income. This is quite similar to how someone would receive interest for holding money in a bank account or giving it to the bank to invest. The act of Staking differs from one blockchain or protocol to another.
Messari, in a recently released data that gives the percentage of increase of crypto assets that have a Staking mechanism noted from the previous three months before the launch.
Elrond (ERD) 639%, Zilliqa (ZIL) 432%, Kyber Network 206%, Cardano 175% ahead of July 29th Shelley upgrade, Matic Network (MATIC) 79%, 0x (ZRX)45%.
The exceptions were Synthetix (SNX), Harmony (ONE), both embarked on massive uptrends consequently after the Staking launch.
One key reason why Staking had accelerated the performance of these assets is due to yield-seeking investors.
The second-largest crypto asset by market cap, Ethereum remains the leader in smart contract blockchain space. Ethereum is currently working on its Staking technology through its serenity upgrade “Ethereum 2.0” which will migrate Ethereum to a proof of stake consensus mechanism. Therefore, if Staking could have induced an intense price jump as mentioned earlier, then the Ethereum serenity upgrade is one thing to watch out.
Ethereum is at the moment trading at $240 while seemed to be less impacted by the DeFi explosion but a prominent investor, Adam Cochran believes Staking would be the game-changer which will cause Ethereum to embark on a massive bull run that will hallmark the “largest economic shift in society”.
However, the timing of Ethereum 2.0 isn’t yet certain as some indicated it might delay until the earlier part of 2021.