Institutional staking will not take off unless asset lock-up solved: Coinbase CFO

Institutional staking will not take off unless asset lock-up solved: Coinbase CFO

 

Institutional client staking of Cryptocurrency Assets, including the post-Merge Ethereum (ETH), could become a “phenomenon” in the near future, but not while their assets still need to be “locked up indefinitely.”

 

Speaking during the second-quarter earnings call on Tuesday, Chief Financial Officer (CFO) Alesia Haas noted that she did not expect their new exclusive institutional client staking service, rolled out in Q2, to be a “near-term phenomenon” until a “truly liquid staking option” is available:

 

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“This is the first time we had the products available on our platform. Previously, the way that institutional clients could have access to staking is via Coinbase exchange Cloud [...] But offering it as the delegated staking service similar to what we have for retail customers.”

 

 

However, Haas said it was still “early days” for their new staking service, adding that they will likely only see a “real material impact” when they are done creating a liquid staking option for post-Merge Ethereum, also known as ETH2.

 

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Liquid staking is a way of locking up funds to earn staking rewards, while still having access to the total funds. 

 

Haas described that many financial services institutions client “do not want their assets to be held up indefinitely:”

 

“So, when you stake ETH2 you are locking up your assets into Ethereum until the Merge and then some period after that. For some institutional clients, that liquidity lock-up is not pleasant to them. And so, while they may be interested in staking, they want to have stake on a liquid asset.”

 

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Haas reiterated this issue is “something we are looking to solve,” and further added that once this liquid staking is available for financial services institutions that can pool in funds at higher proportions, “we will see the real material impact of institutional client is revenue.”

 

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Investors and institutions clients have been able to access Coinbase Exchange is delegated staking service through Coinbase Exchange Prime, which was first launched in September 2021. The exchange platform also offers other integrated services, such as access to a custody wallet with enhanced safety, real-time Cryptocurrency Market data and analytics, and other cryptocurrency-native features like decentralized governance.