Binance exchange conducted a study of cryptocurrencies based on the Proof-of-Stake (PoS) consensus method. According to its results, the capitalization of coins on PoS will double after the transition of Ethereum to this method.
In the report
it is noted that the market capitalization of the 10 largest PoS-based cryptocurrencies, taking into account the future accession of Ethereum, is $25.8 billion. This is about 10% of the total market capitalization. At the same time, if we exclude the contribution of Ethereum, which is just planning to switch to consensus PoS, it turns out that the capitalization of such cryptocurrencies is $11.2 billion, of which $6.4 billion is used for stacking.
Unlike the Proof-of-Work (PoW) method, in networks built using PoS, blockchain nodes confirm blocks without investing computing power. The PoS algorithm selects block validators based on the number of coins in the node’s wallet. In other words, they are blocked on the account, and the node receives a reward for confirming the block.
Among the cryptocurrencies traded on Binance, the largest percentage of stacking is shown by the coins of Algorand, Tezos and Cosmos — more than 70% of the coins in circulation are used for stacking. In projects such as Tron and Qtum, less than 25% of coins are blocked on wallets for confirming blocks.
The researchers noted that PoS-based cryptocurrencies are suitable for passive investment, but the investor needs to determine the ratio of return to risk, since some projects have a lack of liquidity. In addition, the periods of blocking assets in the wallet differ.
Earlier, Ethereum co-founder Vitalik Buterin said that after switching to Proof-of-Stake (PoS), the Ethereum network will become more secure than the Bitcoin blockchain, and the cost of an attack is too high. The transition to the new algorithm in the Ethereum network is expected in January next year.