1 year ago
79 Institutional staking of crypto assets, including the post-Merge Ethereum, could become a “phenomenon” in the future, but not while their assets still require to be locked up.
While speaking during a Q2 earnings call on August 9, chief financial officer Alesia Haas noted that she did not expect their new exclusive institutional staking service, rolled out in Q2, to be a “near-term phenomenon” until a “truly liquid staking option” becomes available:
“This is the first time we had the products available. Previously, the way that institutions could have access to staking is via Coinbase Cloud […] But offering it as the delegated staking service similar to what we have for retail customers.”
Coinbase’s new institutional-focused staking product will not be a “near-term phenomenon” while liquid staking is still being worked out. Nonetheless, Haas said it was still ‘early days’ for their new staking service, saying that they will probably just see a “real material impact” when they have developed a liquid staking option for post-Merge Ethereum, also referred to as Eth2.
Liquid staking is the procedure of locking up funds to earn staking rewards, while still have access to the Funds. Haas explained that most financial institutions “don’t want their assets held indefinitely:”
“So when you stake ETH2 you are locking in your assets into Ethereum until the Merge and then some period after. For some institutions, that liquidity lock-up is not palatable to them. And so, while they may be interested in staking, they want to have staking on a liquid asset.”
Haas reaffirmed the issue is “something we are looking to solve,” and stated that after the liquid staking is available for financial institutions that can pool in funds at higher proportions, “we’ll see the real material impact of institutional revenue.”
Institutions and investors have managed to access Coinbase’s delegated staking service via Coinbase Prime, which was first unveiled in September 2021. The platform also provides other integrated services, including access to custody wallets with increased security, instantaneous relay of crypto market data and analytics, and other crypto-native features like decentralized governance.
