Institutional staking of crypto assets, including post-merge Ethereum, could become a “phenomenon” in the future, but not while their assets are still “locked up.”
During a Q2 earnings call on Tuesday, Chief Financial Officer Alesia Haas said she didn’t expect her new exclusive institutional staking service, launching in Q2, to be a “short-term phenomenon” until a “really liquid Staking Option” is available. is available:
“This is the first time we have had the products available. Previously, institutions could access staking through the Coinbase Cloud […] But we offer it as a delegated staking service, similar to what we have for retail clients.”
However, Haas said it’s still “early days” for their new staking service, adding that they likely won’t see “real material impact” until they add a liquid staking option to post-merge Ethereum, too known as Eth2.
Liquid staking is the process of locking funds in order to earn staking rewards while still having access to the funds.
Haas explained that many financial institutions “don’t want their assets to be held indefinitely”:
“So if you stake ETH2, you lock up your assets in Ethereum until the merger and some time after. This liquidity block is not pleasant for some institutes. And so, while they may be interested in staking, they want the staking on a liquid asset.”
Haas reiterated that this issue “is something we want to solve,” adding that once this liquid staking becomes available for financial institutions that can pool funds in higher proportions, “we will see the real, material impact on institutional revenue.”
Related: Coinbase is partnering with BlackRock to create new entry points for institutional crypto investing
Investors and institutions were able to access Coinbase’s delegated staking service through Coinbase Prime, which first launched in September 2021. The platform also offers other integrated services, such as z and analytics, as well as other crypto-native features such as decentralized governance.