Promoting participation of institutional investors
Coinbase, a major US crypto asset (virtual currency) exchange, announced on the 7th that it will partner with the liquid staking protocol “Liquid Collective” to provide a new service.
With this service, institutional investors using Coinbase will be able to stake Ethereum (ETH) and receive a token called “Liquid Staked ETH (LsETH)” in exchange for it. First of all, the platform for institutional investors “Coinbase Prime” will support staking and custody, and will also support trading from now on.
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Liquid Collective is a liquid staking protocol developed and popularized by Alluvial Finance. Normally, when staking virtual currency, it is locked and cannot be used, but with the introduction of liquid staking, a substitute token will be issued and it will be possible to operate that token.
Users of liquid staking can earn profits by operating DeFi (decentralized finance) while receiving interest through staking. Liquid Collective is designed for institutional investors.
Alluvial Finance announced the launch of Liquid Collective on the 7th. In addition to Coinbase, cryptocurrency service company Bitcoin Suisse also announced Liquid Collective.
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Characteristics of the Liquid Collective
Liquid Collective is a protocol for institutional investors, so security and compliance are important. Users are required to perform identity verification and anti-money laundering (AML) checks.
Another major feature is to provide slash (penalty) compensation to LsETH holders. This compensation is provided from the protocol’s service fee.
What is a slash
Confiscation of part or all of the staked assets if the node is not operated stably or acts maliciously.
Commenting on the announcement, Coinbase executive Aaron Schnarch said:
Liquid Collective is a valuable product with built-in slash compensation and compliance measures.
We will support this new staking under the strategy of providing many products.
In addition, Alluvial Finance co-founder Matt Leisinger commented as follows.
In order to allow more institutional investors to participate in Ethereum staking, it is necessary to make staked Ethereum available elsewhere while ensuring compliance.
Liquid Collective will meet the demand of institutional investors who want to participate in the security of the Ethereum network by staking.
Coinbase announced in May last year that it would partner with staking solution company Figment to support the development of a liquid staking platform. The support target at that time was Alluvial Finance.
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In this announcement, Coinbase explained that it will use the same approach to support cryptocurrencies other than Ethereum in the future. Traditional staking services support brands such as Polygon (MATIC), Solana (SOL) and Polkadot (DOT).
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