ETH staking for institutional investors
Ethereum (ETH) US software company ConsenSys announced on the 22nd that it plans to set up a marketplace dedicated to staking in the crypto asset (virtual currency) wallet “Metamask Institutional” for institutional investors.
— MetaMask Institutional (@MMInstitutional) March 22, 2023
Scheduled for release on March 27, the marketplace aims to encourage more institutional investors to participate in Ethereum (ETH) staking. Offers hand-picked providers and enables one-click ETH staking.
Partnered staking service providers include Allnodes.com, Blockdaemon, Kiln, and ConsenSys’ own staking service. The total TVL (total locked-up asset value) of the four providers is over ¥260 billion ($2 billion), with performance-based fee rates of around 5% each.
Each of the four staking providers has different infrastructure configurations, reporting capabilities, privacy policies, fee designs, etc. In addition, the operating organization is a US company, other countries, a decentralized type, and has acquired security certification ISO27001, etc., and responds to various regulatory requirements.
MetaMask Institutional Product Lead Johann Bornman says institutional investors have shown significant interest in staking ETH since Ethereum’s major upgrade “merge.”
We have observed a real shift in interest from institutional investors to staking investments, especially over the past six months.
The merge was an upgrade implemented in September 2010. Ethereum has moved its consensus algorithm from Proof of Work (PoW) to Proof of Stake (PoS). When the merge was implemented, the total amount of ETH staked was 13.7 million ETH, but at the time of writing it has increased to 17.7 million ETH (about 4 trillion yen).
On April 12th, Ethereum plans to upgrade “Shapella” (Shanghai + Capella = Shapella), which will implement a staked ETH withdrawal function. “Institutional investors will be more interested,” Bornman predicts, as they will have more flexibility in managing their assets.
connection:Ethereum “Shanghai”, mainnet implementation date decided
Consider liquid staking
Bornman also hinted that liquid staking could be added to Metamask Institutional’s staking marketplace in the future.
I think liquid staking will play a big role in the future of Web3. We are contemplating how to provide a liquid staking service provider for our users.
Liquid staking is a mechanism that allows you to receive derivative tokens (LSD) issued 1:1 through smart contracts and operate them in DeFi (decentralized finance) while receiving cryptocurrency staking rewards.
Major ETH liquid staking providers include Lido and Rocket Pool, where users receive LSD (stETH, rETH, etc.) in exchange for deposited Ethereum. These LSDs are widely integrated in DeFi, and can be used as collateral for borrowing on DeFi such as Aave, and additional revenue can be obtained through market making on DEX (distributed exchange).
In January, MetaMask released an Ethereum (ETH) staking feature for individual users. Added support for Lido and Rocket Pool liquid staking.
connection:Cryptocurrency wallet MetaMask implements Ethereum staking function
Meanwhile, there is increasing “regulatory uncertainty” regarding staking services, mainly in the United States. On the 22nd, major U.S. cryptocurrency exchange Coinbase announced that it had received a “Wells Notice” from the U.S. Securities and Exchange Commission (SEC).
The SEC’s investigation includes listed cryptocurrencies and staking service Coinbase Earn, and the issue is whether Coinbase violates securities laws.
What is staking
A system or service that rewards you by depositing a certain amount of virtual currency for a specified period of time. Rewards can be received as compensation for contributing to the operation of the blockchain.
connection:SEC Investigates Coinbase for Securities Law Violations, Sends Wells Notice