Staking providers could expand institutional presence in the crypto space: Report
The Ethereum blockchain’s carbon footprint is expected to reduce by 99% following last week’s Merge event. By positioning staking as a service for retail and institutional investors, the upgrade could also have a significant impact on the crypto economy, according to a report from Bitwise on Tuesday.
The company said it projects potential gains of 4%–8% for long-term investors through Ether (ETH) staking, while J.P. Morgan analysts forecast that staking yields across PoS blockchains could double to $40 billion by 2025.
Users who stake crypto assets earn rewards — known as yields — from transaction fees paid by other network users. Seen by some as a form of passive income generation, staking requires users to lock their assets in a smart contract, during which time coins can not be spent or traded on the market. This may be one of the main challenges to the adoption of PoS blockchains, especially by institutional investors.
In a Q2 earnings call, Coinbase CEO Alesia Haas noted that institutional staking of crypto assets could be a "phenomenon" in the future as soon as the market overcomes its liquidity lock-up.
Industry players have proposed a number of solutions in an effort to address this lack of liquidity surrounding staked coins. On Sunday, Alluvial announced a liquid collective enterprise and multichain protocol with Coinbase and Kraken as integrators and Staked, Coinbase Cloud and Figment as validators. The solution aims to provide institutional holders with a viable liquid staking solution.
“Proof of Stake blockchains make up more than half of the entire crypto market cap, yet, there hasn't been a viable option for institutional token holders to participate in liquid staking," Matt Leisinger, CEO of Alluvial said in
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