Institutional staking of crypto assets, including post-Merger Ethereum, could become a “phenomenon” in the future, but not while their assets still need to be “locked up.”
Speaking during a second-quarter earnings call on August 9, Chief Financial Officer (CFO) Alesia Haas noted that she did not expect her new proprietary institutional staking service, rolled out in Q2, to be a “short-term phenomenon” until a “truly liquid staking option” was available.
“It is the first time that we have the products available. Previously, the way institutions could access staking was through the Coinbase Cloud. […] But offering it as the delegated staking service similar to what we have for retail clients.”
Nevertheless, Haas said it was still “early” for their new staking service, adding that they will likely only see a “real material impact” when they have created a post-merger liquid staking option for Ethereum, also known as ETH2.
Liquid staking is the process of locking up funds for staking rewards, while still having access to the funds.
Haas explained that many financial institutions “don’t want their assets held indefinitely.”
“So when you stake ETH2 you are locking your assets in Ethereum until the Merger and some period after. For some institutions, that liquidity block is not acceptable. So even if they are interested in staking, they want to do it in a liquid asset.”
Haas reaffirmed that this issue is “something we’re trying to figure out,” adding that Once this liquid staking is available to financial institutions that can raise funds in higher ratios, “we will see the true material impact of institutional income.”
Investors and institutions have been able to access Coinbase’s delegated staking service through ‘Coinbase Prime’, which was first launched in September 2021. The platform also offers other integrated services, such as access to a security-enhanced custodial wallet, real-time cryptocurrency market data and analytics, and other crypto-native features such as decentralized governance.
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